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+VOLKSWAGEN
+374
+Composition of the Committees
+373
+Members of the Supervisory Board and
+56
+Notes
+227
+Responsibility Statement
+Members of the Board of Management
+Cash Flow Statement
+226
+Group Corporate Governance Declaration
+44
+Statement of Changes in Equity
+Statement of Comprehensive Income
+Income Statement
+54
+FINANCIAL STATEMENTS
+Independent Auditor's Report
+59
+•
+•
+•
+•
+Scheduled Dates
+395
+Glossary
+59
+393
+Five-Year Review
+392
+391
+ADDITIONAL INFORMATION
+6
+•
+Remuneration Report
+Financial Key Performance Indicators
+CONSOLIDATED
+224
+Balance Sheet
+34
+214
+Bentley
+32
+184
+Audi
+30
+Porsche
+176
+28
+167
+SEAT
+26
+136
+ŠKODA
+24
+Volkswagen Commercial Vehicles
+36
+TRATON GROUP
+38
+222
+GOVERNANCE
+220
+CORPORATE
+3
+219
+Report on Risks and Opportunities
+Prospects for 2022
+Report on Expected Developments
+EU Taxonomy
+Sustainable Value Enhancement
+with the German Commercial Code)
+Volkswagen AG (condensed, in accordance
+and Net Assets
+Results of Operations, Financial Position
+UT
+40 Volkswagen Financial Services
+Volkswagen Group China
+•
+•
+.
+•
+THE BOARD
+- Herbert Diess -
+new sources of revenue.
+In the world of NEW AUTO, mobility will be
+emission-free and autonomous, with a high
+degree of customer orientation and
+To our Shareholders
+Letter to our Shareholders
+6
+OF MANAGEMENT
+Herbert Diess
+We are gradually expanding our range of mobility services. We
+have initiated the acquisition of Europcar to add rental services
+to our range. For the operation of shuttle fleets, we are con-
+between CARIAD and Bosch for the joint development of
+software.
+for example Sincerely,
+We are already seeing the dramatic consequences of the war in
+Ukraine. The effects on our company cannot be foreseen at
+present. However, in 2021, as in 2020, Volkswagen has shown
+that our business is resilient despite acute global challenges
+and that we are able to handle crises better than in the past. At
+the same time, we will continue to consistently implement our
+NEW AUTO strategy in order to play a leading role in the future
+world of mobility.
+Despite many successes, 2021 was not an easy year for many
+employees. I am therefore pleased that we achieved the best
+score ever in the annual employee opinion survey; this score
+has been rising continuously since 2018. Thank you very much
+for your trust. And I would also like to thank you, dear Share-
+holders, for supporting our strategy.
+As for our headquarters in Wolfsburg, we have developed a
+vision for 2030 to ensure the competitiveness of our largest
+location. We are going to build a new factory for two billion
+euros with faster and more efficient processes to produce
+a competitive, electric and Level 4-capable car from 2026
+- Project Trinity. It will bring autonomous driving to the
+volume segment. We are investing 800 million euros in a new
+development center, the most modern in Germany. In addition,
+a leaner, more efficient headquarters will be created at the site,
+which will manage the Group worldwide.
+tinuing to gather experience in Hamburg with MOIA after a
+pandemic-related break, with the aim of having autonomous
+shuttles driving through the Hanseatic city from 2025. To this
+end, we are already testing autonomous driving in Munich with
+the Volkswagen ID. Buzz and Argo AI.
+H.DRESS
+AKTIENGESELLSCHAFT
+Premium brand group
+MARKUS DUESMANN
+of Volkswagen Aktiengesellschaft
+NEW
+AUTO
+MURAT AKSEL
+Purchasing
+OLIVER BLUME
+Sport & Luxury brand group
+DR. HERBERT DIESS
+Chair of Volkswagen AG
+HILDEGARD WORTMANN
+Sales
+DR. MANFRED DÖSS
+Integrity and Legal Affairs
+.
+HAUKE STARS
+IT
+RALF BRANDSTÄTTER
+Chief Executive Officer of the
+Volkswagen Passenger Cars brand
+-
+Volkswagen Passenger Cars
+Software is the basis for this our software unit CARIAD is
+building up the necessary competencies here. CARIAD now
+employs around 5,000 experts. Thanks to the close cooperation
+between CARIAD and our brands, around 56,000 customers of
+our ID. models were able to update their vehicles over the air
+last year. To accelerate progress in autonomous driving, we
+have integrated Hella's camera software division and are con-
+tinuing to expand strategic partnerships
+With our NEW AUTO strategy, we have set the course to make
+our Group fit for the future. We are transforming ourselves
+from an automobile manufacturer with fascinating brands and
+excellent engineering to a vertically integrated mobility
+company. Battery and charging will become our core compe-
+tence and source of revenue. By founding our own company
+under European law, we are bundling our battery activities and
+occupying all the stages of the value chain that are critical to
+success. In future, third parties will also be able to become
+involved in the company - we are not ruling out an IPO.
+10
+59
+07
+TO OUR SHAREHOLDERS
+•
+•
+•
+Letter to our Shareholders
+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, political and legal environment
+in individual countries, economic regions and markets, 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, any significant shifts in exchange rates or commodities rele-
+vant to the Volkswagen Group or in parts supply (especially semiconductors), or any deviations in the actual effects of
+the Covid-19 pandemic from the scenario presented in this report 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 and of 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.
+.
+•
+•
+•
+•
+•
+•
+This annual report was published on the occasion of the Annual Media Conference on March 15, 2022.
+The Board of Management of Volkswagen Aktiengesellschaft
+Report of the Supervisory Board
+.
+•
+- these five SUV models account for approximately 70% of US
+sales. In 2021, the Volkswagen brand also turned the corner in
+South America. With locally developed models such as the
+Nivus and Taos, we have modernized our product portfolio in
+recent years, and managed to increase our market shares and
+return to profit and positive net cash flow. In China, we
+continue to be very profitable. The Volkswagen brand is the
+market leader with a share of almost 12%. Porsche, Bentley and
+Lamborghini have achieved their best delivery results ever.
+5
+Letter to our Shareholders
+To our Shareholders
+We have reached important milestones in our key markets: In
+the US, the Volkswagen brand delivered 375,000 vehicles, the
+best result since 2013. After years of losses, the Volkswagen
+brand is profitable again in the US, as well as in Canada and
+Mexico. We are hitting all the right buttons for the American
+market with our Atlas family of SUVs, the Taos, Tiguan and ID.4
+We also achieved a great deal strategically last year. Six years
+ago, we made the decision to switch our portfolio to electric
+drives. The present shows that this was the right decision. In
+2021, we were market leader for electric vehicles in Europe with
+a market share of around 25% and were in second place in the
+USA with around 7.5%. This means that our market share for
+electric vehicles is already almost twice as high as for vehicles
+with combustion engines. The American climate policy is giving
+us a tailwind: more than two thirds of all ID.4 buyers in the US
+are new to the Volkswagen brand. In China, we delivered 93,000
+electric vehicles, four times more than the previous year. By
+2030, we will increase the global share of e-vehicles to 50%. The
+future of buses and trucks is also electric: TRATON will contin-
+ually increase investments in the electrification.
+The success of Volkswagen is the success of its 670,000
+employees around the globe. Also in 2021, they achieved a great
+deal. The semiconductor task force found solutions to short-
+term supply bottlenecks with our suppliers and the semi-
+conductor manufacturers, and our developers brought 150
+technical alternatives into the cars to replace missing chips.
+autonomous mobility. We are proposing to our shareholders a
+dividend of 7.56 euros per preferred share and 7.50 euros per
+ordinary share for the 2021 fiscal year.
+The success of the Volkswagen Group with its 120 sites
+worldwide is also closely intertwined with globalization. In
+fiscal year 2021, the Covid-19 pandemic and the shortage of
+semiconductors repeatedly led to production stoppages and
+supply bottlenecks throughout the entire automotive industry.
+As a result, we produced two million cars fewer than planned.
+The fact that the Group was nevertheless able to double its
+operating profit before special items to 20 billion euros
+compared to the previous year is due to our resilience and the
+strong demand for our vehicles, both in the conventional
+combustion engine business and increasingly as electric
+vehicles. The premium group with its brands Audi, Bentley,
+Lamborghini and Ducati contributed disproportionately more
+to the result. We are investing the generated net cash flow of
+8.6 billion euros in our transformation to emission-free,
+We cannot yet foresee the effects on the global economy. But it
+is already clear that a long war would harm not only Europe.
+The international community, whose prosperity is based on
+free world trade and functioning supply chains, would be set
+back by decades. A return to diplomacy and conflict resolution
+based on international law are indispensable.
+It is with deep concern that we are currently looking to Ukraine,
+to the people there, to our colleagues and our European
+neighbors, who are suffering from the war. Since the start of the
+fighting, the Volkswagen Group and its brands have currently
+donated a total of more than 5 million euros to UNO-Flücht-
+lingshilfe (the German partner of the UN Refugee Agency) and
+other aid organizations. At many of our sites, the workforce is
+supporting relief efforts, and many brands are providing cars
+for helpers in Eastern Europe.
+Dear Shureholders,
+To our Shareholders
+Letter to our Shareholders
+Letter to our Shareholders
+4
+•
+In the world of NEW AUTO, mobility will be emission-free and
+autonomous, with a high degree of customer orientation and
+new sources of revenue, for example through assistance
+systems or a broad range of entertainment services that can be
+booked on demand.
+22
+04
+Brands and Business Fields
+7.7
++ 99.2
+9,675
+19,275
+-19.4
+-931
+-751
+4.3
+4.8
++ 88.8
++ 12.3
+222,884
+10,607
+20,026
+250,200
++1.5
+662.6
+8.0
+672.8
+20,126
++ 72.5
+Cash flows from investing activities attributable to operating activities³
++ 31.1
+24,721
+32,402
+Cash flows from operating activities
+7.6
+7.6
+11,667
+R&D ratio (%)
+13,885
+15,583
+Total research and development costs
+Automotive Division²
++74.8
+5.2
+8,824
+8.0
+15,428
++ 12.2
+-6.9
+8,900
+8,283
+Vehicle sales (units)
+Deliveries to customers (units)
+Volume Data¹ in thousands
+VOLKSWAGEN GROUP
+•
+•
+•
+Production (units)
+•
+•
+•
+NEW AUTO
+ANNUAL REPORT 2021
+AUTO
+NEW
+133
+•
+Employees at Dec. 31
+Financial Data (IFRSS), € million
+Sales revenue
+-6.3
+9,157
+8,576
+9,305
+8,882
+%
+2020
+2021
+Key Figures
+Earnings after tax
+Return on sales before tax (%)
+Earnings before tax
+Operating return on sales (%)
+Operating result
+Special items
+Operating return on sales before special items (%)
+Operating result before special items
+23,793
+18,364
+-4.5
+of which: capex
+10
+Aktiengesellschaft
+90
+The Board of Management of Volkswagen
+07
+86
+Letter to our Shareholders
+Report of the Supervisory Board
+04
+TO OUR SHAREHOLDERS
+1
+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.
+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.
+4 Earnings before tax as a percentage of average equity.
+3 Excluding acquisition and disposal of equity investments: €17,910 (17,175) million.
+2 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.
+4
+DIVISIONS
+NEW
+AUTO
+19
++ 29.6
+222
+119
+Shares and Bonds
+113
+Business Development
+98
+95
+92
+Disclosures Required Under Takeover Law
+Structure and Business Activities
+Key Performance Indicators
+Internal Management System and
+Goals and Strategies
+REPORT
+GROUP MANAGEMENT
+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.
+4.80
+4.86
+2
++ 5.0
+-36.2
+Return on equity before tax² (%)
+Financial Services Division
+6.5
+-0.4
+26,796
+6,357
+8,610
+26,685
+10.4
+Return on investment (ROI) in %
+Net liquidity at Dec. 31
+Net cash flow
+6.1
+5.1
+capex/sales revenue (%)
+-5.1
+7.50
+7.56
+11,065
+10,496
+VOLKSWAGEN AG
+Volume Data in thousands
++ 35.4
+2020
+-0.9
+70,917
+4,041
+118.7
+117.6
+%
+2021
+8.8
+Employees at Dec. 31
+17.3
+per preferred share
+per ordinary share
+Dividends (€)
+Net income for the fiscal year
+Sales revenue
+Financial Data (HGB), € million
+67,535
+6,338
+LEGAL FACTORS INFLUENCING BUSINESS
+consortium company of a joint public takeover offer for the
+shares of Europcar Mobility Group S.A., Paris/France. Fol-
+lowing a successful review of the offer documents, the French
+regulator approved the takeover offer at the end of November
+2021. The period during which the Europcar shareholders can
+tender their shares began at the end of November 2021.
+Together with its two partners, Volkswagen is offering a price
+of €0.50 per Europcar share through the consortium com-
+pany. If more than 90% of the shares are tendered, an addi-
+tional one cent per share will be paid. If the offer is accepted,
+the consortium– according to current information will
+assume joint control of Europcar.
+To expand its battery expertise, Volkswagen acquired an
+interest in Gotion High-Tech Co., Ltd., Hefei (China) through
+Volkswagen (China) Investment Co. Ltd, making it the largest
+shareholder of the Chinese battery supplier at 26%. The
+Group spent a total of €1.2 billion on this transaction. The
+investment is accounted for using the equity method.
+Disclosures Required under Takeover Law
+Like other international companies, the business of Volks-
+wagen companies is affected by numerous laws in Germany
+and abroad. In particular, there are legal requirements
+relating to services, development, products, production and
+distribution, as well as supervisory, data protection, financial,
+company, commercial, capital market, anti-trust and tax
+regulations and regulations relating to labor, banking, state
+aid, energy, environmental and insurance law.
+In 2021, the Volkswagen Group and Rimac Automobili d.o.o.,
+Sveta Nedelja/Croatia (Rimac), established Bugatti Rimac
+d.o.o., which has its headquarters in Sveta Nedelja. Volks-
+wagen contributed its fully consolidated subsidiaries Bugatti
+Automobiles S.A.S, Molsheim/France and initially 51% of
+Bugatti International S.A., Strassen/ Luxembourg. Rimac holds
+55% of the shares in the company, and Volkswagen holds 45%
+through Dr. Ing. h.c. F. Porsche AG (Porsche). In addition,
+Porsche holds a direct interest of 22% in Rimac. Initially,
+Bugatti Rimac d.o.o. will produce two hypercar models, the
+Bugatti Chiron and the Rimac Nevera. It is envisaged that
+further in the future the activities of Bugatti Rimac d.o.o. will
+focus on a joint product portfolio under the Bugatti brand
+name with the aim of developing, producing and selling
+electric-powered, luxury hyper sports cars.
+The merger of MAN SE (MAN) with TRATON was adopted by
+resolution of the Annual General Meeting of MAN at the end
+of June 2021. The merger resolution also brought about the
+share transfer process in which the MAN shares held by
+noncontrolling interest shareholders were transferred to
+TRATON against payment of an appropriate cash settlement
+(merger squeeze-out). The merger of MAN with TRATON was
+entered in the commercial register for MAN and TRATON on
+August 31, 2021. The squeeze-out took legal effect upon entry
+in the commercial register. This was followed in early Sep-
+tember 2021 by the disbursement of the cash settlement of
+€70.68 per ordinary and preferred share to the noncontrol-
+ling interest shareholders of MAN SE, thus completing the
+MAN SE squeeze-out. The appropriateness of the cash settle-
+ment is being reviewed by judicial award proceedings
+initiated by the noncontrolling interest shareholders who
+had received a settlement as a result of the squeeze-out.
+Group Management Report
+At the end of July 2021, the Volkswagen Supervisory
+Board approved an agreement with investment firm Attestor
+Limited and with Pon Holdings B.V. for the submission via a
+GROUP CORPORATE GOVERNANCE DECLARATION
+of-conformity.html
+porate-governance/declaration-of-conformity.html.
+i VOLKSWAGEN AG SHAREHOLDINGS
+www.volkswagenag.com/en/Investor Relations/news-and-publications/
+Financial Statements.html
+i GROUP CORPORATE GOVERNANCE DECLARATION
+www.volkswagenag.com/en/Investor Relations/corporate-governance/declaration-
+Disclosures Required under
+Takeover Law
+Structure and Business Activities
+Group Management Report
+95
+The Group Corporate Governance Declaration can be found
+in this annual report and is permanently available on our
+website at www.volkswagenag.com/en/InvestorRelations/cor-
+94
+With its brands, the Volkswagen Group is present in all
+relevant markets around the world. The key sales markets
+currently include Western Europe, China, the USA, Brazil,
+Russia, Mexico, Poland and Turkey.
+MATERIAL CHANGES IN EQUITY INVESTMENTS
+The Passenger Cars Business Area in essence consolidates
+the Volkswagen Group's passenger car brands and the Volks-
+wagen Commercial Vehicles brand. Activities focus on the
+development of vehicles, engines and vehicle software, the
+production and sale of passenger cars and light commercial
+vehicles, and the genuine parts business. The product port-
+folio ranges from compact cars to luxury vehicles and also
+includes motorcycles, and is supplemented by mobility solu-
+tions.
+The Commercial Vehicles Business Area primarily com-
+prises the development, production and sale of trucks and
+buses, the corresponding genuine parts business and related
+services. The commercial vehicles portfolio ranges from light
+vans to heavy trucks and buses. Navistar has supplemented
+the brands in this business area since July 1, 2021. The
+collaboration between the commercial vehicle brands is
+coordinated within TRATON SE, which is listed on the stock
+exchange.
+This chapter contains the Volkswagen Group's disclosures relating to takeover law required
+by sections 289a and 315a of the HGB.
+The Automotive Division comprises the Passenger Cars
+Business Area with the Volume, Premium and Sport &
+Luxury brand groups, as well as the Commercial Vehicles and
+Power Engineering business areas.
+The Power Engineering Business Area combines the large-
+bore diesel engines, turbomachinery and propulsion com-
+ponents businesses.
+The Financial Services Division's activities comprise dealer
+and customer financing, vehicle leasing, direct banking and
+insurance activities, fleet management and mobility services.
+Group Management Report
+Structure and Business Activities
+93
+In November 2020, TRATON SE (TRATON) and Navistar Inter-
+national Corporation (Navistar), a leading US truck manu-
+facturer, announced the signing of a binding merger agree-
+ment. At the end of 2020, TRATON held a 16.7% interest in
+Navistar. On March 2, 2021, TRATON's takeover of Navistar
+was approved by the shareholders of Navistar at their Annual
+General Meeting. In early July 2021, TRATON acquired all
+outstanding ordinary shares of Navistar for a purchase price
+of USD 3.7 billion through a TRATON GROUP company after
+receiving all the regulatory approvals. TRATON now holds
+100% of the shares in Navistar.
+Volkswagen AG and the Volkswagen Group are managed by
+the Volkswagen AG Board of Management in accordance with
+the Volkswagen AG Articles of Association and the rules of
+procedure for Volkswagen AG's Board of Management issued
+by the Supervisory Board.
+In December 2021, the Supervisory Board decided to
+increase the number of members of the Board of Man-
+agement and reorganize its structure and functions in the
+process. A new board-level management function for Volks-
+wagen Passenger Cars was created effective January 1, 2022. A
+new board-level management function was also created for
+Group Sales effective February 1, 2022.
+The Volume brand group comprises the Volkswagen Pas-
+senger Cars, ŠKODA, SEAT/CUPRA and Volkswagen Commercial
+Vehicles brands. Since March 1, 2021, Bentley has been
+assigned to the Premium brand group, which previously
+comprised the Audi, Lamborghini and Ducati brands. Fol-
+lowing the departure of Bugatti from the Group's brand port-
+folio in November 2021, the Sport & Luxury brand group now
+consists of the Porsche brand. In the Truck & Bus brand
+group, TRATON SE acts as the umbrella for the Scania, MAN,
+Volkswagen Caminhões and Navistar commercial vehicles
+brands.
+Alongside the brand groups, Volkswagen continued to
+build its software subsidiary CARIAD SE in the reporting year.
+This company is pooling and expanding the software exper-
+tise within the Volkswagen Group and is working toward
+providing a standardized operating system for Group brand
+vehicles.
+We are confident that this management model will allow
+better use of existing expertise and economies of scale, boost
+synergy effects more systematically and accelerate decision
+making. In addition, it will prepare the Volkswagen Group for
+a management structure that is simpler, leaner and more
+effective, while strengthening the brands and giving them
+more autonomy. In line with the principle of subsidiarity,
+decisions will be taken at the lowest competent level, close to
+business operations, thus improving collaboration between
+the brands and the Group as a whole, leveraging more
+synergies and ensuring that management of the Group is a
+shared undertaking.
+Each brand within the Volkswagen Group is managed by a
+brand board of management, which ensures the brand's
+independent and self-contained development and business
+operations. To the extent permitted by law, the board adheres
+to the Group targets and requirements laid down by the
+Board of Management of Volkswagen AG, as well as with the
+agreements in the brand groups. This allows Group-wide
+interests to be pursued, while at the same time safeguarding
+and reinforcing each brand's specific characteristics. Matters
+that are of importance to the Group as a whole are submitted
+to the Group Board of Management to be agreed upon, to the
+extent permitted by law. The rights and obligations of the
+statutory bodies of the relevant brand company thereby
+remain unaffected.
+The Volkswagen Group companies are managed solely by
+their respective managements. The management of each
+individual company takes into account not only the interest
+of its own company but also the interests of the Group, the
+relevant brand group and the individual brands in accor-
+dance with the framework laid down by law.
+In addition, at Group level, Board of Management com-
+mittees address key strategic issues relating to products,
+technologies, investments, digital transformation, integrity
+and compliance, risk management, human resources and
+management issues. We are continually revising and optimi-
+zing the committees in order to review their relevance and
+further increase the efficiency of their decision making. This
+reduces complexity and reinforces governance within the
+Group.
+Within the scope of our new Group strategy NEW AUTO,
+which was adopted in the fiscal year, we are using the Group
+Steering Model base initiative to enhance our governance
+model. The objective is to improve the manageability of the
+Group in unison with the brand groups and to make even
+better use of overarching areas of synergy. In addition to the
+further growth of CARIAD, these areas of synergy also include
+activities in fields such as mechatronics, battery technology
+and charging infrastructure, and mobility solutions.
+Accordingly, responsibilities were divided among ten
+board-level management functions until December 31, 2021.
+In addition to the Chair of the Board of Management, a
+function which also includes the Volume brand group, the
+other Board functions are Purchasing, Technology, Finance,
+Human Resources and Truck & Bus, Integrity and Legal
+Affairs, Premium, Sport & Luxury, IT and China. As of Decem-
+ber 31, 2021, the Chair of the Board of Management has also
+been responsible for China and the board member for
+Finance has also been responsible for IT. With effect from
+February 1, 2022, a board member is responsible for IT alone
+and the board-level function for China has once again been
+assigned to a specific member of the Board of Management
+as of August 1, 2022.
+CAPITAL STRUCTURE
+The global economy recorded positive growth in fiscal year 2021 as it recovered
+from the disruption caused by the Covid-19 pandemic. Global demand for vehicles
+was up on the previous year. Amid continued challenging market conditions,
+the Volkswagen Group delivered 8.9 million vehicles to customers.
+SHAREHOLDER RIGHTS AND OBLIGATIONS
+At the end of fiscal year 2019, a banking syndicate granted
+Volkswagen AG a syndicated line of credit amounting to
+€10.0 billion, which currently runs until December 2026.
+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 call right exists if one individual or
+several individuals acting jointly who as of the date of this
+agreement exercise control over the Company have legal or
+economic ownership of shares that together make up more
+than 90% of the voting rights of the Company. However, a call
+right also exists if one individual or several individuals acting
+Group Management Report
+Disclosures Required under Takeover Law
+jointly who as of the date of this agreement do not exercise
+control over the Company obtain control over the Company.
+Such a call right does not exist, however, if one shareholder or
+several shareholders of Porsche Automobil Holding SE or one
+or several legal entities from the Porsche or Piëch family
+directly or indirectly obtain control over the Company.
+Volkswagen AG and the Ford Motor Company entered
+into a Master Collaboration Agreement in January 2019. This
+agreement sets out a framework of obligations, which are to
+apply to the further co-operation agreements entered into
+between the parties, including those entered into in fiscal
+year 2021. It also covers the Development Agreement con-
+cluded 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
+been defined to mean a change affecting more than 50% of
+the voting capital of one of the companies or a change in the
+ability to directly or indirectly control the management of
+one company through its decision making bodies. The right
+of termination must be exercised within 90 days of the
+company becoming aware of a Change of Control.
+97
+98
+Business Development
+MATERIAL AGREEMENTS OF THE PARENT COMPANY IN THE EVENT
+OF A CHANGE OF CONTROL FOLLOWING A TAKEOVER BID
+Business Development
+GLOBAL SPREAD OF CORONAVIRUS (SARS-COV-2)
+At the end of 2019, initial cases of a potentially fatal respi-
+ratory disease became known in China. This disease is attri-
+butable to a novel virus belonging to the coronavirus family.
+Infections also appeared outside China from mid-January
+2020. The number of people infected rose very rapidly in the
+course of 2020, albeit with differences in timing and regional
+spread. Around the world, measures to contain the pandemic
+were taken and adapted at national level and with varying
+levels of intensity. However, these ultimately failed to bring
+the spread of the SARS-CoV-2 virus under control. In addition,
+aid packages to support the economy were agreed by the
+European Commission and by numerous governments in
+Europe and other regions, and economic stimulus measures
+were introduced to counter the pandemic's impact.
+Throughout the whole of 2020, the global spread of the SARS-
+CoV-2 virus brought enormous disruption to all areas of
+everyday life and the economy.
+The mostly dynamic increase in the rate of infection
+continued in many places also throughout the first quarter
+of 2021. This was accompanied by ongoing disruption - such
+as contact and mobility restrictions or limitations on
+business activities - in many parts of the world. With the
+increased availability of testing capacities and vaccines, some
+countries have permitted the extensive reopening of
+everyday life and the economy. In China in particular, the
+measures taken resulted in a removal of restrictions. In most
+of the world, the rate of new infections initially declined in
+the second quarter of 2021, leading to further easing of the
+measures taken to contain the pandemic. From the middle of
+the year, however, some countries recorded a renewed
+increase in infection rates, which was mainly due to new
+variants of the SARS-CoV-2 virus. Some restrictions returned
+-
+in response to the situation. Most regions of the world saw a
+declining rate of new infections in the third quarter of 2021.
+Against this backdrop, many countries largely lifted their
+restrictions on everyday life and the economy, depending on
+the progress of their vaccination campaigns. Temporary
+increases in case numbers - primarily associated with
+increased travel - only rarely resulted in the measures being
+tightened again. Mainly due to new variants of the SARS-CoV-
+2 virus, numerous countries around the world again recorded
+some very dynamic increases in infection rates in the course
+of the fourth quarter, which, depending particularly on the
+country's vaccination progress, resulted in renewed restric-
+tions.
+Overall in 2021, the global spread of the SARS-CoV-2 virus
+again brought substantial disruption to all areas of everyday
+life and the economy.
+entities.
+DEVELOPMENTS IN THE GLOBAL ECONOMY
+Group Management Report
+Further details of the authorization to issue new shares
+and their permitted uses may be found in the notes to the
+consolidated financial statements.
+At the Annual General Meeting on May 14, 2019, a reso-
+lution was passed authorizing the Board of Management,
+with the consent of the Supervisory Board, to increase the
+Company's share capital by a total of up to €179.2 million
+(corresponding to 70 million shares) on one or more occa-
+sions up to May 13, 2024 by issuing new nonvoting preferred
+shares against cash contributions.
+According to German stock corporation law, the Annual
+General Meeting can authorize the Board of Management, for
+a maximum period of five years, to issue new shares. It can
+also authorize the Board of Management, for a maximum
+period of five years, to issue bonds on the basis of which new
+shares are to be issued. The Annual General Meeting also
+decides the extent to which shareholders have preemptive
+rights to the new shares or bonds. The maximum amount of
+authorized share capital or contingent capital available for
+these purposes is determined by Article 4 of the Articles of
+Association of Volkswagen AG, as amended.
+The shares convey pecuniary and administrative rights. The
+pecuniary rights include in particular the shareholders' right
+to participate in profits (section 58(4) of the Aktiengesetz
+(AktG - German Stock Corporation Act)), the right to partici-
+pate in liquidation proceeds (section 271 of the AktG) and
+preemptive rights to shares in the event of capital increases
+(section 186 of the AktG), which can be disapplied by the
+Annual General Meeting with the approval of the Special
+Meeting of Preferred Shareholders, where appropriate. Admin-
+istrative rights include the right to attend the Annual General
+Meeting, to speak there, to ask questions, to propose motions
+and to exercise voting rights. When virtual Annual General
+Meetings are held to avoid risks during the Covid-19 pan-
+demic, these rights are partially restricted. Shareholders can
+enforce their pecuniary and administrative rights in partic-
+ular through actions seeking disclosure and actions for
+avoidance.
+Each ordinary share grants the holder one vote at the
+Annual General Meeting. The Annual General Meeting elects
+shareholder representatives to the Supervisory Board and
+elects the auditors; in particular, it resolves on the appro-
+priation of net profit, formally approves the actions of the
+Board of Management and the Supervisory Board, and
+resolves on amendments to the Articles of Association of
+Volkswagen AG, capital measures and authorizations to pur-
+chase treasury shares; if required, it also resolves on the
+performance of a special audit, the removal before the end of
+their term of office of Supervisory Board members elected at
+the Annual General Meeting and the winding-up of the Com-
+pany.
+Preferred shareholders generally have no voting rights.
+However, in the exceptional case that they are granted voting
+rights by law (for example, when preferred share dividends
+were not paid in one year and not compensated for in full in
+the following year), each preferred share also grants the
+holder one vote at the Annual General Meeting. Furthermore,
+preferred shares entitle the holder to a €0.06 higher dividend
+than ordinary shares (further details on this right to preferred
+and additional dividends are specified in Article 27(2) of the
+Articles of Association of Volkswagen AG).
+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
+July 21, 1960, as amended on July 30, 2009, includes various
+provisions in derogation of the German Stock Corporation
+Act, for example on the exercise of voting rights by proxy
+(section 3 of the VW-Gesetz) and on majority voting require-
+ments at the Annual General Meeting (section 4(3) of the VW-
+Gesetz).
+In accordance with the Volkswagen AG Articles of Asso-
+ciation (Article 11(1)), the State of Lower Saxony is entitled to
+appoint two members of the Supervisory Board of Volks-
+wagen AG for as long as it directly or indirectly holds at least
+15% of Volkswagen AG's ordinary shares. In addition, resolu-
+tions by the Annual General Meeting that are required by law
+to be adopted by a qualified majority require a majority of
+more than four-fifths of the share capital of the Company
+represented when the resolution is adopted (Article 25(2)),
+regardless of the provisions of the VW-Gesetz.
+SHAREHOLDINGS EXCEEDING 10% OF VOTING RIGHTS
+Shareholdings in Volkswagen AG that exceed 10% of voting
+rights are shown in the notes to the annual financial
+statements of Volkswagen AG, which are available online at
+https://www.volkswagenag.com/en/Investor Relations.html.
+The current notifications regarding changes in voting rights
+in accordance with the Wertpapierhandelsgesetz (WpHG -
+96
+Disclosures Required under Takeover Law
+Group Management Report
+German Securities Trading Act) are also published on this
+website.
+COMPOSITION OF THE SUPERVISORY BOARD
+The Supervisory Board consists of 20 members, half of whom
+are shareholder representatives. In accordance with Arti-
+cle 11(1) of the Articles of Association of Volkswagen AG, the
+State of Lower Saxony is entitled to appoint two of these
+shareholder representatives for as long as it directly or
+indirectly holds at least 15% of the Company's ordinary
+shares. The remaining shareholder representatives on the
+Supervisory Board are elected by the Annual General Meeting.
+The other half of the Supervisory Board consists of
+employee representatives elected by the employees in accor-
+dance with the Mitbestimmungsgesetz (MitbestG German
+Codetermination Act). A total of seven of these employee
+representatives are Company employees elected by the work-
+force; the other three employee representatives are trade
+union representatives elected by the workforce.
+The Chairman of the Supervisory Board is generally a
+shareholder representative elected by the other members of
+the Supervisory Board. In the event that a Supervisory Board
+vote is tied, the Chairman of the Supervisory Board has a
+casting vote in accordance with the MitbestG.
+The goals for the composition of the Supervisory Board
+and information about its composition are described in the
+Group Corporate Governance Declaration.
+STATUTORY REQUIREMENTS AND REQUIREMENTS OF THE
+ARTICLES OF ASSOCIATION WITH REGARD TO THE APPOINTMENT
+AND REMOVAL OF BOARD OF MANAGEMENT MEMBERS AND
+TO AMENDMENTS TO THE ARTICLES OF ASSOCIATION
+The appointment and removal of members of the Board of
+Management are governed by sections 84 and 85 of the AktG,
+which specify that members of the Board of Management are
+appointed by the Supervisory Board for a maximum of five
+years. Board of Management members may be reappointed
+or have their term of office extended for a maximum of five
+years in each case. In addition, Article 6 of the Articles of
+Association of Volkswagen AG states that the number of
+Board of Management members is stipulated by the Super-
+visory Board and that the Board of Management must consist
+of at least three persons. In line with future legal requir-
+ements, the members of the Volkswagen AG Board of Man-
+agement must include at least one woman and at least one
+man.
+The Annual General Meeting resolves amendments to the
+Articles of Association (section 119(1) of the AktG). In accor-
+dance with section 4(3) of the VW-Gesetz as amended on
+July 30, 2009 and Article 25(2) of the Articles of Association of
+Volkswagen AG, Annual General Meeting resolutions to
+amend the Articles of Association require a majority of more
+than four-fifths of the share capital represented.
+POWERS OF THE BOARD OF MANAGEMENT, IN PARTICULAR
+CONCERNING THE ISSUE OF NEW SHARES AND THE REPURCHASE
+OF TREASURY SHARES
+Volkswagen AG's share capital amounted to €1,283,315,873.28
+(€1,283,315,873.28) on December 31, 2021. It was composed
+of 295,089,818 ordinary shares and 206,205,445 preferred
+shares. Each share conveys a notional interest of €2.56 in the
+share capital.
+wagen Commercial Vehicles brands - are independent legal
+Our primary objectives in this process include complying
+with laws and regulations, establishing secure processes and
+dealing openly with mistakes so that they can be avoided or
+rectified in the future. In terms of integrity, Volkswagen aims
+to become a role model for a modern, transparent and suc-
+cessful enterprise.
+ORGANIZATIONAL STRUCTURE OF THE GROUP
+2025
+6.0%
+8 to 9%
+6.9%
+~5%
+7.4%
+~6%
+Ratio of capex to sales revenue in
+the Automotive Division
+Net cash flow in the
+Automotive Division
+Payout ratio
+Net liquidity in the
+Automotive Division
+2015
+Return on investment (ROI) in the
+Automotive Division
+€8,887 million
+negative
+>€10 billion
+≥ 30%
+€24,522 million,
+11.5%
+-0.2%
+~10% of
+consolidated
+sales revenue
+>15%
+90
+1 2015 before special items.
+Internal Management System and Key Performance Indicators
+Operating return on sales¹
+Research and development ratio
+(R&D ratio) in the Automotive
+Division
+The strategic KPIs are operationalized for internal man-
+agement purposes: target and actual data are derived from
+Volkswagen Group figures.
+The global economy recovered in 2021 due to the temporary
+relaxation of many restrictions and recorded growth of 5.6
+(−3.4)%. The average rate of expansion of gross domestic
+product (GDP) was far above the previous year's level in both
+the advanced economies and the emerging markets. The
+progress made by many countries in administering vaccines
+to their populations had a positive effect, while the
+emergence of new variants of the virus led to renewed
+national rises in infections. At a national level, performance
+was dependent among other things on the extent to which
+the negative impacts of the Covid-19 pandemic were
+materializing and the intensity with which measures were
+taken to contain the spread. The governments and central
+Group Management Report
+Goals and Strategies
+89
+environment, safety and integrity, and competitive profit-
+ability. We want to grow sustainably by consistently pursuing
+these objectives.
+The target dimensions apply throughout the whole Group.
+The strategic KPIs that we use to measure how well we have
+implemented our Group strategy are dependent on the
+respective business model.
+As the new Group strategy NEW AUTO is currently being
+concretized and enhanced, the content of the strategic KPIs
+and the correspondingly adjusted targets for 2030 in the
+target dimensions are still being determined. As part of this,
+the relevance of the KPIs will be reviewed at Group level and
+their focus will be continuously monitored and adjusted as
+necessary. We report on the originally defined nonfinancial
+strategic KPIs in the chapter entitled "Sustainable Value
+Enhancement”.
+Target dimension: excited customers
+This target dimension focuses on the diverse needs of our
+customers and on tailor-made mobility solutions. We aspire
+to exceed our customers' expectations, thus generating
+maximum customer benefit. This requires not only the best
+products, the most efficient solutions and the best service,
+but 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.
+STRATEGIC KPIS: COMPETITIVE PROFITABILITY
+The strategic KPIs consist of the conquest rate and KPIs
+pertaining to loyalty, customer satisfaction and quality.
+To achieve sustainable success, we need skilled and dedicated
+employees. We aim to boost their satisfaction and motivation
+by means of equal opportunities, an attractive and modern
+working environment, and a forward-looking approach to the
+organization of work. An exemplary leadership and corporate
+culture forms the basis for this, allowing us to retain our core
+workforce and attract new talents.
+The strategic KPIs of this target dimension cover internal
+employer attractiveness determined by means of the opinion
+survey, external employer attractiveness, an external employer
+ranking and the diversity index.
+Target dimension: role model for environment, safety and integrity
+Every day, we at the Volkswagen Group assume and exercise
+responsibility in issues relating to the environment, safety
+and society. This commitment should be reflected both in
+our thoughts and actions and in all our decisions. We pay
+particular attention to the use of resources and the emissions
+of our product portfolio as well as those of our sites and
+plants, with the goal of continuously improving our carbon
+footprint and lowering pollutant emissions. Through inno-
+vations and outstanding quality, we aim for maximum
+product safety.
+The strategic KPIs of this target dimension consist of the
+decarbonization index and fleet CO2 emissions figures, com-
+pliance, a culture of dealing openly with mistakes, and
+integrity.
+Target dimension: competitive profitability
+Investors judge us by whether we are able to meet our obli-
+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.
+We make investments with a view to achieving profitable
+growth and strengthening our competitiveness, thus keeping
+the Volkswagen Group on a firm footing for the future and
+ensuring it remains an attractive investment option.
+The goals we have set ourselves are operational excellence
+in all business processes and becoming the benchmark for
+the entire industry.
+Target dimension: excellent employer
+The Volkswagen Group is one of the leading multibrand
+groups in the automotive industry. The Company's business
+activities comprise the Automotive and Financial Services
+divisions. All brands within the Automotive Division - with
+the exception of the Volkswagen Passenger Cars and Volks-
+Group Management Report
+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.
+91
+Deliveries to customers are defined as handovers of new
+vehicles to the end customer. This figure shows the popu-
+larity of our products and is the measure we use to determine
+our competitive position in the various markets. Deliveries
+are closely related to our goal of transforming the Volks-
+wagen Group into a world-leading, software-centric mobility
+provider. One of the most important prerequisites for the
+Company's long-term success is a strong brand portfolio that
+- on the basis of outstanding quality offers tailor-made
+mobility solutions with safe, connected, resource-efficient
+and thus largely emission-free vehicles that meet the diverse
+needs of customers. Demand for our products and mobility
+services guarantees not only unit sales and production, but
+also full utilization of our sites and the jobs of our employees.
+The goals we are striving for cannot be achieved without a
+skilled, flexible and dedicated workforce and a consensus on
+shared values.
+Sales revenue, which does not include the figures for our
+equity-accounted Chinese joint ventures, reflects our market
+success in financial terms. Following adjustment for our use
+of resources, the operating result reflects the Company's
+actual business activity and documents the economic success
+of our core business. The operating return on sales is the ratio
+of the operating result to sales revenue.
+ratio reflects our activities undertaken to safeguard the Com-
+pany's future viability.
+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
+digitalizing our product range and for environmentally
+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
+payments, for example. It is calculated as cash flows from
+operating activities less cash flows from investing activities
+attributable to operating activities.
+Net liquidity in the Automotive Division is the total of
+cash, cash equivalents, securities, loans and time deposits not
+financed by third-party borrowings. To safeguard our busi-
+ness activities, we have formulated the strategic target that
+net liquidity in the Automotive Division should amount to
+approximately 10% of the consolidated sales revenue.
+We use the return on investment (ROI) to calculate the
+return on invested capital for a particular period in the Auto-
+motive Division, including the equity-accounted Chinese
+joint ventures on a proportionate basis, by calculating the
+ratio of the operating result after tax to average invested
+The research and development ratio (R&D ratio) in the
+Automotive Division shows total research and development
+costs in relation to sales revenue. Research and development
+costs comprise a range of expenses, from futurology through
+to the development of marketable products. Particular empha-capital. If the return on investment (ROI) exceeds the market
+sis is placed on the environmentally friendly orientation and
+digitalization of our product portfolio, the expansion of our
+battery expertise, the development of software and new
+platforms and the creation of new technologies. The R&D
+Internal Management System and Key Performance Indicators
+cost of capital, the value of the Company has increased. This
+is how we measure the financial success of our brands,
+locations and vehicle projects.
+Structure and Business Activities
+Group Management Report
+Structure and Business Activities
+This chapter describes the legal and organizational structure of the Volkswagen Group
+and explains the material changes in 2021 with respect to equity investments.
+OUTLINE OF THE LEGAL STRUCTURE OF THE GROUP
+Volkswagen AG is the parent company of the Volkswagen
+Group. It develops vehicles and components for the Group
+brands, but also produces and sells vehicles, in particular
+passenger cars and light commercial vehicles for the Volks-
+wagen Passenger Cars and Volkswagen Commercial Vehicles
+brands. In its capacity as parent company, Volkswagen AG
+holds direct or indirect interests in AUDI AG, SEAT S.A., ŠKODA
+AUTO a.s., Dr. Ing. h.c. F. Porsche AG, TRATON SE, Volkswagen
+Financial Services AG, Volkswagen Bank GmbH and a large
+number of other companies in Germany and abroad. More
+detailed disclosures are contained in the list of shareholdings
+in accordance with sections 285 and 313 of the Handels-
+gesetzbuch (HGB – German Commercial Code), which can be
+accessed at www.volkswagenag.com/en/Investor Relations.html
+and is part of the annual financial statements.
+-
+Volkswagen AG is a vertically integrated energy supply
+company as defined by section 3 no. 38 of the Energiewirt-
+schaftsgesetz (EnWG - German Energy Industry Act) and is
+therefore subject to the provisions of the EnWG. In the elec-
+tricity sector, Volkswagen AG generates, sells and distributes
+electricity as a group together with its subsidiaries.
+The Volkswagen AG Board of Management has sole
+responsibility for managing the Company. The Supervisory
+Board appoints, monitors and advises the Board of Man-
+agement; it is consulted directly on decisions that are of
+fundamental significance for the Company.
+92
+Internal Management System and
+Key Performance Indicators
+Group Management Report
+> Net liquidity in the Automotive Division
+The Volkswagen Group's performance and success are
+expressed in both financial and nonfinancial key perfor-
+mance indicators.
+In the following, we first describe the internal man-
+agement process and then explain the Volkswagen Group's
+most significant performance indicators, known as the core
+performance indicators.
+INTERNAL MANAGEMENT PROCESS IN THE VOLKSWAGEN GROUP
+Consistent, close integration of the Group and brand
+strategies with the operational planning process ensures
+transparency at the Volkswagen Group when it comes to the
+financial assessment and evaluation of strategic decisions.
+The operational medium-term planning that is conducted
+once a year and generally covers a period of five years is
+incorporated into the strategic planning as a key manage-
+ment element of the Group.
+Medium-term planning forms the core of our operational
+planning and is used to formulate and safeguard the
+requirements for realizing strategic projects designed to meet
+Group targets in both technical and economic terms - and
+particularly in relation to earnings, cash flow and liquidity
+effects. In addition, it is used to coordinate all business areas
+with respect to the strategic action areas concerned, namely
+functions/processes, products and markets.
+When planning the Company's future, the individual
+planning components are determined on the basis of the
+timescale involved:
+> The long-term unit sales plan, which sets out market and
+segment growth and then derives the Volkswagen Group's
+delivery volumes from this
+> The product program as the strategic, long-term factor
+determining corporate policy
+>
+> Return on investment (ROI) in the Automotive Division
+Capacity and utilization planning for the individual site.
+The budget is reviewed each month to establish the target
+achievement level. Key internal management instruments
+comprise target/actual comparisons, prior-year comparisons,
+variance analyses and, where necessary, action plans to
+ensure targets are met. For the current fiscal year, detailed
+revolving monthly forecasts are prepared for the coming
+three months and the full year, taking into account the cur-
+rent risks and opportunities. The focus of intrayear internal
+management is therefore on adapting ongoing activities. The
+current forecast serves as a corrective to the medium-term
+and budget planning that follows on from it.
+CORE PERFORMANCE INDICATORS IN THE VOLKSWAGEN GROUP
+The Volkswagen Group's internal management system is
+based on nine core performance indicators, which are derived
+from our strategic goals:
+> Deliveries to customers
+> Sales revenue
+> Operating result
+> Operating return on sales
+> Research and development ratio (R&D ratio) in the Auto-
+motive Division
+> Ratio of capex to sales revenue in the Automotive Division
+> Net cash flow in the Automotive Division
+The coordinated results of the upstream planning processes
+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
+and balance sheet planning, profitability and liquidity, as well
+as the upfront investments needed for alternative products
+and the implementation of strategic options in the future. The
+first year of the medium-term planning period is fixed and a
+budget drawn up for the individual months. This is planned in
+detail down to the level of the operating cost centers.
+Group Management Report
+Business Development
+The market for power generation improved slightly in
+2021 compared with the previous year. Overall, there are
+initial signs of market recovery; however, due to factors such
+as CO2 reductions, a great deal of hesitancy remains regarding
+investment decisions. The trend away from oil-fired power
+plants toward dual-fuel and gas-fired power plants continued.
+Demand for new energy solutions remained high with a
+strong trend toward greater flexibility and decentralized
+availability and a particular focus on hydrogen technologies.
+Percentage change in GDP
+8,610,747
+Commercial Vehicles
+Total
+271,210
+8,881,957
+9,114,804
+190,187
+9,304,991
+%
+-5.5
++42.6
+-4.5
+1 Prior-year deliveries have been updated to reflect subsequent statistical trends. The
+figures include the Chinese joint ventures.
+GLOBAL DELIVERIES BY THE PASSENGER CARS BUSINESS AREA
+With its passenger car brands, the Volkswagen Group is
+present in all relevant automotive markets around the world.
+The key sales markets currently include Western Europe,
+China, the USA, Brazil, Russia, Mexico, Turkey and Poland.
+Passenger Cars
+Sales of Volkswagen Group passenger cars and light
+commercial vehicles worldwide declined by 5.5% in fiscal
+year 2021 to 8,610,747 units. Market conditions that resulted
+from the uncertainty and the measures taken around the
+world in connection with the Covid-19 pandemic have had a
+material impact on the prior-year figure. With regard to the
+trend in our deliveries to customers, there were some
+appreciable differences across individual countries and
+regions in the reporting year, depending on the latest infec-
+tion rates, the related restrictions and the scale of disruption
+caused by the pandemic in the prior-year period. Further-
+more, supply bottlenecks for semiconductors and the
+resulting limited availability of Group models meant that
+demand could not be adequately met in some regions,
+particularly from the third quarter of 2021 onwards. While
+the number of vehicles delivered to customers in the indi-
+vidual months of the first half of 2021 only failed to exceed
+the prior-year figure in January, the number of vehicles
+delivered to customers in the second half of the year was
+below the comparative figure for the previous year in every
+month. Nevertheless, SEAT, Bentley, Lamborghini and
+Porsche all surpassed their prior-year figures. In the North
+America, South America, Middle East and Africa regions, we
+registered higher sales figures than in the previous year.
+In an overall global market exhibiting moderate growth,
+we achieved a passenger car market share of 11.7 (12.9)%.
+The table at the end of this section gives an overview of
+passenger car deliveries to customers of the Volkswagen
+Group in the regions and the key individual markets. The
+sales figures for Group models in these markets and regions
+are explained in the following sections.
+Deliveries in Europe/Other Markets
+In Western Europe, the Volkswagen Group delivered 2,761,568
+vehicles to customers in 2021 in an overall market
+experiencing a slight contraction. This was 3.1% fewer than
+in the previous year, which had been strained by the
+pandemic. While the course of the Covid-19 pandemic and
+the restrictions introduced to contain it weighed on demand
+for Group models in the first quarter of 2021, there was an
+acceleration in demand, particularly at the beginning of the
+second quarter, as compared with the same quarter of the
+previous year, which had been affected most by the
+pandemic. This meant that the sales volume at the end of the
+first half of the year was higher than the comparable figure
+for 2020. From the third quarter of 2021 onwards, supply
+bottlenecks for semiconductors and the resulting limited
+availability of Group models increasingly meant that demand
+could not be adequately met. Consequently, the number of
+sales to customers fell again by the end of the year to below
+the prior-year figure. Customer interest in the Volkswagen
+Group's electric vehicles was strongest in Western Europe,
+where we delivered around three-quarters of our plug-in
+hybrids and nearly two-thirds of our all-electric models to
+customers in 2021.
+106
+Business Development
+VOLKSWAGEN GROUP DELIVERIES BY MONTH
+Vehicles in thousands
+1,100
+1,000
+900
+The Group's sales figures continued to respond positively to
+its e-mobility campaign. In the fiscal year now ended, we
+delivered 452,944 all-electric vehicles to customers world-
+wide, 221,317 units or 95.5% more than in the previous year
+and accounting for 5.1 (2.5) % of the Group's total deliveries.
+Our plug-in hybrid models also remained very popular with
+our customers, with 309,462 units being sold (previous year:
+191,970). As a result, electric vehicle deliveries climbed by
+80.0%, with their share of total Group deliveries rising to
+8.6 (4.6) %. The Group's most successful all-electric vehicles
+included the ID.4, ID.3 and e-up! from the Volkswagen
+Passenger Cars brand, the Audi e-tron and Audi Q4 e-tron, the
+ŠKODA Enyaq iV, the SEAT Mii electric and the Porsche Taycan.
+The most popular plug-in hybrid models included the Golf,
+Passat Estate and Tiguan from Volkswagen Passenger Cars,
+the Audi A3 Sportback and Audi Q5, the ŠKODA Octavia
+Combi and ŠKODA Superb Combi, the SEAT Leon Sports-
+tourer, the CUPRA Formentor and the Porsche Cayenne.
+2020
+2021
+VOLKSWAGEN GROUP DELIVERIES¹
+Group Management Report
+recorded a recovery compared to the prior year, particularly
+due to growth in the heavy commercial vehicles category.
+This positive trend was also seen in financing and lease
+contracts for heavy commercial vehicles in Europe and Brazil.
+NEW GROUP MODELS IN 2021
+The Volkswagen Group offers a broad portfolio of products
+covering almost all key segments and body types so that its
+customers can choose the right vehicle for their needs. In
+fiscal year 2021, we added further attractive vehicles, not only
+systematically expanding our portfolio of all-electric and
+hybrid vehicles, but also bringing compelling new products
+with conventional combustion engines onto the market.
+In the compact segment, the Volkswagen Passenger Cars
+brand upgraded the Polo in 2021. It also launched the Taigo,
+Volkswagen's new sporty crossover, which is expected to
+appeal to new target groups with its emotional design and
+innovative technology. Once the updated version of the best-
+selling Tiguan was available, the Tiguan Allspace was also
+upgraded. In the high-end segments, the brand made two
+sporty statements with its launch of the Arteon R and the
+Arteon Shooting Brake R. In China, a large number of new
+models were brought out in 2021, including the all-electric
+ID.4 X, ID.4 CROZZ, ID.6 X and ID.6 CROZZ. The Passat,
+Teramont, Teramont X and Tiguan L were among the estab-
+lished vehicles with a conventional powertrain that received
+an update. The brand new Talagon and the CC Shooting Brake
+rounded off the portfolio of new models. In the United States,
+the Taos extended the lower end of the SUV portfolio, and the
+first all-electric SUV was brought out in the shape of the ID.4.
+The successful Jetta and Tiguan models received product
+upgrades. Volkswagen is catering to the desires of sporty
+drivers with the new Golf GTI and Golf R. In other key regions,
+too, models that meet regional requirements were intro-
+duced to the market, highlights in the reporting period being
+the Taigun in India and the Taos in Russia.
+The Audi brand expanded its portfolio of all-electric cars
+in 2021 with the addition of the Q4 e-tron and the Q4
+Sportback e-tron. At the upper end of the scale, Audi made a
+clear commitment to athleticism with the e-tron GT and the
+RS e-tron GT. In the conventional powertrain line-up, the RS3
+received an update. The range of vehicles with plug-in hybrid
+drives was expanded by models including the Q3, the Q5 and
+the Q8. In China, Audi brought out the Q5L Sportback.
+The era of state-of-the-art electric mobility based on the
+MEB dawned at ŠKODA in 2021 with the rollout of the Enyaq
+iV. The next generation of the popular Fabia model range was
+launched, and the top-selling Kodiaq was updated to make it
+fit for the digital future. In India, ŠKODA kicked off a market
+drive with the next generation of the Octavia and the new
+Kushaq.
+The SEAT brand expanded the drive portfolio for its product
+lines in 2021: the successful Leon is now also available with a
+CNG drive, and the Tarraco will come with the option of a
+cutting-edge plug-in hybrid drive in future. The successful
+Ibiza and Arona models received product upgrades. CUPRA
+provided for further highlights with the launch of the
+powerful Formentor on the one hand, and on the other the
+Leon series, which is now available once again as the dynamic
+top-of-the-range model CUPRA Leon. Production of the
+sporty, all-electric CUPRA Born started in 2021.
+Porsche expanded its Taycan range in 2021, adding the
+versatile Cross Turismo. The line of classic sports cars was
+expanded at the upper end of the scale with the addition of
+the 911 GT3, and the new generation of the 911 is now also
+available as a GTS version. In the SUV ranges, the Macan
+received an upgrade, and a new top-of-the-range model is
+available in the form of the Cayenne Turbo GT.
+Bentley expanded the Bentayga range in the reporting
+period by adding a model with a plug-in hybrid drive plus the
+sporty derivative Bentayga S. The Continental GT is now
+available both as a coupé and as a convertible and is rounded
+off at the upper end of the scale by the top-of-the range
+model Speed.
+Lamborghini brought racetrack technology to the road in
+2021 with the Huracan STO.
+Last year, Bugatti complemented its Chiron super sports
+car with two derivatives that further enhance the driving
+experience: the sporty Pur Sport and the Super Sport
+designed for top maximum speeds.
+In 2021, Volkswagen Commercial Vehicles launched the
+T7, the new generation of its best-seller from Hanover and
+included for the first time ever an innovative plug-in hybrid
+option.
+Scania introduced a new powertrain in 2021 that moves
+the
+company y towards sustainability. It offers fuel savings over
+the predecessor model and will also be introduced gradually
+in the other brands of the TRATON GROUP.
+MAN unveiled the MAN TGX Individual Lion S, the
+exclusive top-of-the-range model in the new MAN truck
+generation, which is available in the highest possible power
+ratings of 510 to 640 PS.
+Navistar introduced new products in the field of electric
+mobility in 2021, including a mid-sized truck and a school bus.
+The motorcycles unveiled by Ducati in 2021 include the
+new Multistrada V4 and additional variants in the XDiavel
+family. The Ducati Supersport 950 was launched as a new
+model in the sports family, while the Ducati Diavel 1260
+Lamborghini enhanced the product portfolio.
+VOLKSWAGEN GROUP DELIVERIES
+The Volkswagen Group delivered 8,881,957 vehicles to
+customers worldwide in fiscal year 2021. This was 4.5% or
+Group Management Report
+Business Development
+105
+423,034 units less than in the previous year. While sales
+figures for the Passenger Cars Business Area fell short of the
+prior-year figure, commercial vehicle deliveries to customers
+rose year-on-year. The chart in this section shows the trend in
+deliveries worldwide for the individual months compared
+with the previous year. In the following, we report separately
+on deliveries in the Passenger Cars Business Area and the
+Commercial Vehicles Business Area.
+800
+700
+600
+500
+315
+309
+293
+sales volume were the Golf and Passat Estate from the Volks-
+wagen Passenger Cars brand. In addition, the T-Roc Cabriolet
+and Arteon Shooting Brake together with the ID.3 and ID.4
+from Volkswagen Passenger Cars, the Audi e-tron Sportback
+and the CUPRA Formentor, which had all been introduced as
+new or successor models the previous year, were very popular
+with customers. Eight Group models led the Kraftfahrt-
+Bundesamt (KBA German Federal Motor Transport
+Authority) registration statistics in their respective segments:
+the up!, Golf, T-Roc, Tiguan, Passat, Audi A6, Porsche 911 and
+Multivan/Transporter. The Golf was again the most popular
+passenger car in Germany in terms of registrations in 2021.
+Deliveries in North America
+In North America, the number of Volkswagen Group vehicles
+delivered to customers in the reporting period climbed by
+11.8% compared with the previous year, which had been
+weakened by the pandemic, and thus outperformed the
+overall market. The Group's share of the market in this region
+amounted to 4.9 (4.6)%. The Tiguan Allspace and Jetta from
+Volkswagen Passenger Cars were the most sought-after Group
+models in North America.
+In the US market, which is witnessing moderate growth,
+the Volkswagen Group delivered 12.6% more vehicles to
+customers in fiscal year 2021 than in the previous year. The
+volume of all-electric vehicles delivered in the United States
+tripled year-on-year to 37,179 units. Here, too, bottlenecks in
+the supply of semiconductors had a negative impact on the
+Group's sales figures from the third quarter onwards. The
+Group models to record the greatest increases in absolute
+terms were the Tiguan Allspace, Atlas and Atlas Cross Sport
+from Volkswagen Passenger Cars, the Q3, Q5 and e-tron from
+the Audi brand and the Macan and Taycan from Porsche. The
+Taos and the Tiguan Allspace from Volkswagen Passenger
+Cars, the Audi A3 saloon and Audi Q5 Sportback and the
+Porsche Panamera, as well as the all-electric ID.4 from Volks-
+wagen Passenger Cars, e-tron GT and Q4 e-tron from Audi and
+the Porsche Taycan Cross Turismo were successfully launched
+on the market during the reporting period as new or
+successor models.
+In Canada, the number of vehicles delivered to Volks-
+wagen Group customers rose in the reporting period by
+18.3% compared with 2020. The overall market recorded a
+smaller increase during this period. The Tiguan Allspace and
+Atlas Cross Sport from Volkswagen Passenger Cars, the Audi
+Q3 and the Porsche Macan were some of the models to
+register encouraging volume growth.
+In Mexico, where the market as a whole is seeing distinct
+growth, we sold 3.4% more vehicles to customers in the past
+fiscal year than in the year before. The Group models with the
+highest volume of demand were the Vento and the new Taos
+from the Volkswagen Passenger Cars brand, and the SEAT Ibiza.
+Deliveries in South America
+In the South American market for passenger cars and light
+commercial vehicles, which is seeing significant growth, the
+number of Group models handed over to customers in 2021
+was down 0.8% on the prior-year figure. The Gol, T-Cross and
+the Nivus from Volkswagen Passenger Cars were the Group
+models with the highest demand. The new Taos from Volks-
+wagen Passenger Cars was successfully launched on the
+market. The Group's share of the market in South America
+amounted to 12.4 (14.1) %.
+In the Brazilian market, which is seeing slight growth, the
+Volkswagen Group delivered 7.5% fewer vehicles to custom-
+ers in the reporting period than in the previous year.
+Together with the Gol and the T-Cross, the Nivus from Volks-
+wagen Passenger Cars was in especially high demand.
+108
+Business Development
+Group Management Report
+In Argentina, the number of Volkswagen Group vehicles
+handed over to customers in 2021 decreased by 2.4% year-on-
+year in an overall market exhibiting noticeable growth. The
+Group models with the highest volume of sales were the Gol,
+the Nivus and T-Cross from Volkswagen Passenger Cars and
+the Amarok from Volkswagen Commercial Vehicles.
+Deliveries in the Asia-Pacific region
+In the past fiscal year, the Volkswagen Group saw deliveries to
+customers in the Asia-Pacific region drop by 12.5% compared
+with 2020 in a market that is experiencing moderate growth
+overall. Bottlenecks in the supply of semiconductors were
+most prevalent in this region and had an increased impact
+from the third quarter of 2021 onwards. The Group's share of
+the passenger car market in this region amounted to 10.9
+(13.1)%.
+In China, the recovery of the market as a whole continued
+at a slower pace in 2021. The Volkswagen Group delivered
+14.1% fewer vehicles to customers there than in the
+preceding year. By contrast, the number of all-electric vehi-
+cles delivered to customers in China more than quadrupled
+year-on-year to 92,681 units. Particularly high demand was
+recorded for the new or successor models introduced in the
+course of 2020, these being the Tacqua, Tiguan X, Tayron X
+and Viloran from Volkswagen Passenger Cars, the VS7 from
+the JETTA brand, the Audi A5 Sportback, Audi Q7 and Audi
+e-tron, and the Porsche Taycan. Demand also developed
+encouragingly for models such as the Q3 and Q3 Sportback
+from Audi and the Porsche Macan. The Tiguan L, Passat,
+Talagon, CC Shooting Brake, Teramont and Teramont X
+models from Volkswagen Passenger Cars, the Audi A3L saloon
+and Audi Q5L Sportback, and the Porsche Panamera, as well
+as the all-electric ID.3, ID.4 X, ID.4 CROZZ, ID.6 X and
+ID.6 CROZZ from Volkswagen Passenger Cars were success-
+fully launched on the market during the reporting period as
+new or successor models.
+In the Indian passenger car market, which is recording
+substantial growth, the Volkswagen Group registered a surge
+in demand of over 80% in fiscal year 2021 compared with the
+weak previous year. The Polo and the new Taigun from the
+Volkswagen Passenger Cars brand together with the new
+Kushaq and the Rapid from ŠKODA were the most sought-
+after Group models there.
+In Japan, the number of Group vehicles delivered to
+customers in 2021 was down 2.1% year-on-year in an overall
+market experiencing a moderate decline. The Group models
+to recorded the highest demand were the T-Cross and T-Roc
+from Volkswagen Passenger Cars.
+327
+Business Development
+400
+448
+Group Management Report
+2021
+2020
+400
+J F M A M J JASON D
+Electric vehicles accounted for approximately 18.6% of the
+Group's total deliveries in Western Europe. The Group models
+with the highest sales volume were the T-Roc, Golf, Polo and
+Tiguan from the Volkswagen Passenger Cars brand. In
+addition, the following new or successor models introduced
+to the market in the previous year proved very popular with
+customers: the T-Roc Cabriolet, Arteon Shooting Brake, ID.3
+and ID.4 from the Volkswagen Passenger Cars brand, the A3
+saloon, A3 Sportback and e-tron Sportback from Audi, the
+ŠKODA Octavia saloon and the CUPRA Formentor. In the
+reporting period, the Polo, Taigo and Tiguan Allspace models
+from Volkswagen Passenger Cars, the Fabia and Kodiaq from
+ŠKODA, the Arona and Ibiza from SEAT and the Porsche
+Macan, as well as the all-electric e-tron GT, Q4 e-tron and Q4
+Sportback e-tron from Audi, Enyaq iV from ŠKODA, CUPRA
+Born and Porsche Taycan Cross Turismo were among the
+vehicles successfully launched on the market as new or
+successor models. The new Multivan from Volkswagen
+Commercial Vehicles also celebrated its market debut. The
+Volkswagen Group's share of the passenger car market in
+Western Europe amounted to 23.5 (23.7)%.
+In the Central and Eastern Europe region, the number of
+vehicles handed over to customers in 2021 was down 4.3%
+year-on-year. At the same time, the overall market recorded
+slightly higher volumes. Demand developed encouragingly
+for the T-Cross and T-Roc models from Volkswagen Passenger
+Cars, for the ŠKODA Rapid, Kamiq and Karoq and for the SEAT
+Arona. The Taos was one of the new models successfully
+launched by Volkswagen Passenger Cars. The Volkswagen
+Group's share of the passenger car market in the Central and
+Eastern Europe region amounted to 20.5 (22.0) %.
+ECONOMIC GROWTH
+Deliveries in Germany
+In Germany, the number of Volkswagen Group vehicles
+handed over to customers in 2021 was down 10.0% on the
+pandemic-related weak prior year in an overall market that
+saw a noticeable decline. After the impact of the Covid-19
+pandemic and early purchases made in the fourth quarter of
+2020 in anticipation of the expiry of the temporary reduction
+in value-added tax (VAT) weighted on the volume of deliveries
+in the first quarter, demand recovered during the second
+quarter. Consequently, the volume of vehicles sold at the end
+of the first half of the year was higher than the comparative
+figure for 2020. The limited vehicle availability resulting from
+bottlenecks in the supply of semiconductors had an
+increasing impact on the Group's deliveries from the third
+quarter of 2021, and the number of vehicles handed over to
+customers therefore fell short of the prior-year figure again
+by the end of the year. The Group models with the highest
+Group Management Report
+WORLDWIDE DELIVERIES OF THE MOST SUCCESSFUL GROUP MODEL RANGES IN 2021
+Vehicles in thousands
+Tiguan
+Polo
+Passat
+Lavida
+Jetta
+T-Cross
+Golf
+Q5
+Business Development
+107
+549
+418
+104
+In Turkey, the Volkswagen Group delivered 0.6% more
+vehicles to customers than in 2020 despite the distinct overall
+market downtrend in the previous fiscal year. The Passat
+saloon was the most sought-after Group model. In the South
+African market, the number of Group models sold increased
+by 12.6%, a somewhat slower rise than that registered in the
+overall market. The Polo from the Volkswagen Passenger Cars
+brand remained the most sought-after Group model in this
+region.
+In the Chinese market, both the share of loan-financed
+vehicle purchases and growth in new contracts tapered off in
+2021 owing to the persistent semiconductor shortage and the
+related drop in passenger car sales. As a result, the com-
+parative prior-year figures were not reached in the reporting
+period.
+110
+105
+100
+95
+90
+Group Management Report
+EUR to GBP
+EUR to USD
+EUR to CNY
+EUR to JPY
+85
+EXCHANGE RATE MOVEMENTS FROM DECEMBER 2020 TO DECEMBER 2021
+Index based on month-end prices: as of December 31, 2020 = 100
+DJ F M A M J JASON D
+South America
+Brazil's economy posted growth of 4.4 (−4.2)% in 2021 despite
+high infection rates. Argentina registered a positive economic
+performance with year-on-year growth of 8.4 (-9.9)% amid
+continued high inflation and a substantial depreciation of the
+local currency.
+Asia-Pacific
+The Chinese economy, which had been exposed to the
+negative effects of the Covid-19 pandemic earlier than other
+economies and tackled isolated outbreaks in 2021 with a
+strict zero-Covid strategy, expanded by 8.1 (2.3)% overall.
+India registered strong growth of 8.1 (-7.5)% amid at times
+relatively high infection rates. Japan recorded positive growth
+of 1.9 (-4.5)% versus the prior year.
+TRENDS IN THE MARKETS FOR PASSENGER CARS AND
+LIGHT COMMERCIAL VEHICLES
+In fiscal year 2021, the volume of the passenger car market
+worldwide rose moderately by 4.2% to 70.9 million units
+from a weak level in the prior year. However, the growth was
+uneven owing to the effects of the Covid-19 pandemic, which
+varied strongly from region to region both in 2020 and in the
+reporting period. The semiconductor shortage and the
+resulting supply bottlenecks also had a negative impact in the
+second half of 2021. The overall markets of the Asia-Pacific,
+South America, Africa and Middle East regions recorded
+above-average growth. Increases in Central and Eastern
+Europe as well as in North America were slightly below the
+global average, while in Western Europe, the market volume
+declined further, falling short of the poor prior-year figure.
+In the reporting period, the global volume of new
+registrations for light commercial vehicles was slightly (1.5%)
+higher than in the previous year.
+Sector-specific environment
+The sector-specific environment was influenced significantly
+by fiscal policy measures, which contributed considerably to
+the mixed trends in sales volumes in the markets in 2021.
+These measures included tax cuts or increases, incentive
+programs and sales incentives, as well as import duties.
+significantly year-on-year in the reporting period to
+5.4 (8.1)% but was still higher than the pre-crisis level seen in
+2019. GDP rose by 4.6 (-5.2)% in neighboring Canada and by
+5.5 (-8.4)% in Mexico.
+Business Development
+100
+99
+The commercial vehicle market, which was heavily
+affected by the Covid-19 pandemic in the previous year,
+Global economy
+Western Europe
+Germany
+USA
+China
+8
+4
+0
+-4
+-8
+2017
+2018
+2019
+2020
+2021
+banks of numerous countries continued to maintain their
+expansionary fiscal and monetary policy measures. Interest
+rates therefore remained relatively low. Prices for many
+energy and other commodities rose significantly on average
+year-on-year, amid growing shortages of intermediates and
+commodities. On a global average, consumer prices increased
+at a faster pace than in 2020, and global trade in goods grew
+in the reporting year.
+Europe/Other Markets
+The economy in Western Europe recorded significantly
+positive overall growth of 5.4 (-6.5)% in 2021. This trend was
+seen in all countries in Northern and Southern Europe. The
+reasons for this included the increased resilience to high
+infection rates experienced by the economies in many
+countries. At the same time, the economic recovery was hit
+by temporary national restrictions to contain the pandemic
+and the imbalances between supply and demand that
+partially resulted from them.
+Further, uncertainty was caused in fiscal year 2021 by the
+United Kingdom's exit from the European Union (EU) and the
+new Trade and Cooperation Agreement associated with this.
+In the economies of Central and Eastern Europe, real
+absolute GDP increased significantly by 5.6 (-2.4)% in 2021.
+Economic output increased by 6.4 (−2.1)% in Central Europe
+and 4.2 (-2.8)% in Eastern Europe. The same trend was also
+observed in Russia; economic output in Eastern Europe's
+largest economy grew by 4.3 (-2.9)%.
+In Turkey, the GDP growth rate in fiscal year 2021 rose to
+10.3 (1.6)% amid high inflation and a fall in the value of the
+local currency. South Africa saw significant GDP growth of
+4.7 (-6.4)% in the reporting period, amid persistent structural
+deficits and political challenges.
+Germany
+Germany's economic output recorded a positive growth rate
+of 2.7 (-4.9)% in the reporting year. The labor market
+recovered over the course of the year with a fall in the
+unemployment rate and the number of people on Kurzarbeit
+(short-time working). The temporary easing of restrictions on
+everyday life and economic activity led confidence among
+consumers and companies to improve. On average, it
+exceeded the prior-year levels. Confidence rose significantly
+in the industrial and service sectors.
+US economic output increased by 5.7 (-3.4)% in the reporting
+year despite soaring rates of infection at times. The US
+government approved a further comprehensive stimulus
+package in the first quarter of 2021 to strengthen the
+economy. The US Federal Reserve maintained its low interest
+rates, alongside other measures to support the economy. The
+weekly number of people filing new claims for unem-
+ployment benefits showed a downward trend. This was
+reflected accordingly in the unemployment rate, which fell
+In addition, non-tariff trade barriers to protect the respec-
+tive domestic automotive industries made the movement of
+vehicles, parts and components more difficult.
+Europe/Other Markets
+North America
+Group Management Report
+TRENDS IN THE MARKETS FOR COMMERCIAL VEHICLES
+Since July 1, 2021, Navistar has been a TRATON GROUP brand,
+making it part of the Volkswagen Group's Commercial
+Vehicles Business Area. This has broadened the relevant
+markets in the commercial vehicles business, both for trucks
+and for the school bus segment, which expanded to include
+North America (consisting of USA, Canada and Mexico).
+In the markets that are relevant for the Volks-
+wagen Group, global demand for mid-sized and heavy trucks
+with a gross weight of more than six tonnes experienced
+pronounced growth versus the comparison period in fiscal
+year 2021 (+19.5%). In comparison with the previous year,
+which had been adversely affected by the Covid-19 pandemic,
+a recovery of the truck markets could be observed worldwide.
+In the 27 EU states excluding Malta, but including the
+United Kingdom, Norway and Switzerland (EU27+3), the
+number of new truck registrations was significantly up on the
+prior-year figure, with growth of 17.1% to a total of
+320 thousand vehicles. Growth could be observed in almost
+all truck markets in the region, albeit to differing degrees. The
+market recovery already evident since the second half of 2020
+continued in the reporting year. Registrations in Germany,
+the largest market in this region, increased distinctly year-on-
+year (+6.2%). An increase of almost 60% was registered in
+Poland, while the UK recorded growth of 12.8%. There was
+also a distinct increase in demand in France (+6.1%). The
+Russian market experienced pronounced growth (+19.5%)
+and new registrations in Turkey increased by around 56%
+year-on-year, as compared with the low prior-year level. In
+the South African market, demand rose substantially
+(+20.8%). The truck market in North America is divided into
+weight classes 1 to 8. In the segments relevant for Volkswagen
+TRENDS IN THE MARKETS FOR POWER ENGINEERING
+The markets for power engineering are subject to differing
+regional and economic factors. Consequently, their business
+growth trends are mostly independent of each other.
+Despite the global impact of the Covid-19 pandemic and
+continuing uncertainty, for instance surrounding future
+emissions regulations, the marine market was significantly
+higher in 2021 than in the previous year. In merchant ship-
+ping, performance in the market for container ships in
+particular remained encouraging thanks to high demand
+combined with bottlenecks in transport capacity. Overall, the
+market areas excluding merchant shipping contracted
+slightly in 2021 compared with the prior year. Demand in the
+market for cruise ships and passenger ferries remained low
+due to the continuing difficult liquidity situation of shipping
+companies as a result of the Covid-19 pandemic. The special
+market for government vessels, which is supported by state
+investment, was below the prior-year level. In the offshore
+sector, the existing overcapacity continued to curb invest-
+ment in offshore oil production. China, South Korea and
+Japan remained the dominant shipbuilding countries,
+accounting for a global market share of around 90% mea-
+sured in terms of the number of ships.
+Group Management Report
+Business Development
+103
+There was moderate growth in demand overall (+3.0%) in
+the bus markets that are relevant for the Volkswagen Group
+compared with the previous year. Demand for buses in the
+EU27+3 markets in the reporting year was overall in line with
+the weak level of the previous year (+0.1%), to differing
+extents in the individual countries. The bus market in North
+America recorded a moderate decline (-2.6%) year-on-year.
+Demand for buses in Brazil was slightly up on the previous
+year's level (+0.9%). As a consequence of the Covid-19
+pandemic, demand for coaches in particular was still virtually
+non-existent in all of the bus markets that are relevant for the
+Volkswagen Group.
+Compared with a year earlier, the turbomachinery market
+recovered significantly from the negative impact of the
+Covid-19 pandemic. Prices for raw materials continued to
+increase significantly, resulting in rising demand for pro-
+duction facilities with turbo compressors in the raw materials
+and processing industry. The new business fields for turbo-
+machinery used in the area of decarbonization expanded
+significantly on the prior year, driven by greater investment
+and markedly higher prices for carbon dioxide certificates in
+European trading. However, demand for steam turbines used
+for power generation and gas turbines used for decentralized,
+industrial combined-heat-and-power installations declined
+and deteriorated slightly year-on-year due to the shift in the
+focus of investments by electricity producers to the field of
+renewable energy.
+Compared with 2020, the after-sales business for turbo-
+machinery saw an initial recovery from the negative effects of
+the Covid-19 pandemic, especially in the second half of the
+year. However, it did not yet match the pre-crisis level.
+TRENDS IN THE MARKETS FOR FINANCIAL SERVICES
+Demand for automotive financial services was buoyant in
+2021 due, among other things, to the persistently low key
+interest rates in the main currency areas. Nevertheless, the
+Covid-19 pandemic and the limited vehicle availability due to
+the semiconductor shortage put pressure on the demand for
+financial services in almost all regions. Overall, a continuing
+shift from financing to leasing is being observed. Demand for
+mobility services in the retail and business customer
+segment increased. These services focus on the use rather
+than ownership of an automobile, for example car sub-
+scription models. There was also a moderate increase in
+demand for service products such as maintenance and
+servicing agreements or insurance, given that they allow
+customers to calculate total operating costs.
+The European passenger car market was increasingly
+affected in the reporting period by the impact of the semi-
+conductor shortage; vehicle deliveries were slightly below the
+prior-year period, which had been weak due to the pandemic.
+New contracts for financial services products in the new
+vehicle business reached the prior-year level in this still
+difficult market environment. A positive trend was recorded
+in the financing of used vehicles; here particularly sales of
+after-sales products such as servicing, maintenance and spare
+parts agreements were up substantially on the previous
+year's level.
+In addition to the impact of the Covid-19 pandemic, the
+financial services business in Germany increasingly faced the
+challenges presented by the semiconductor shortage over the
+course of 2021. Deliveries of new vehicles declined, which in
+turn also resulted in decreasing vehicle availability in the
+used vehicle market. Nevertheless, the number of new
+contracts for new vehicle leases among both retail and fleet
+customers increased compared with the prior-year period. In
+contrast, the number of new financing contracts for new and
+used vehicles and direct business were down on the previous
+year. New vehicle penetration exceeded the very good prior-
+year figure. Apart from a few exceptions, the number of new
+contracts for services and insurance products was down.
+Demand for financing and insurance products for new
+and used vehicles in South Africa persisted at the previous
+year's level, continuing to be bolstered by campaigns, vehicle
+price inflation and persistently low interest rates. Financed
+vehicle purchases, however, remained difficult overall in light
+of the subdued economy and continuing pressure on dispos-
+able income.
+In the North America region, the semiconductor shortage
+increasingly weighed on vehicle deliveries, although they
+exceeded the prior-year level. In the United States and
+Mexico, both the proportion of lease and financing contracts
+in percentage terms and the absolute number of contracts
+were down on the prior-year figures. In Canada, the propor-
+tion of lease and financing contracts in percentage terms was
+down on the prior-year figures; however, the absolute
+number of contracts increased. Demand for automotive-
+related after-sales products was up on the previous year
+throughout the entire region.
+In Western Europe, the number of new passenger car
+registrations in the reporting period was slightly down on the
+previous year's weak level, declining by 2.0% to 10.7 million
+vehicles. The continuing restrictions aimed at containing the
+Covid-19 pandemic led to a year-on-year decline in deliveries
+in the first two months of 2021. From March to June, demand
+in each of the individual months exceeded that of the
+In the South America region, excess demand for new
+vehicles and a sharp rise in interest rates in Brazil led to a
+growing number of cash sales. As a result, the number of
+financing contracts decreased year-on-year. Demand for
+long-term leases rose, also among private customers. Sales in
+Argentina increased through car savings plans.
+The after-sales business for diesel engines continued to be
+adversely affected by the Covid-19 pandemic and remained at
+the prior-year level. The Covid-19 pandemic and the
+associated cash-flow difficulties on the part of customers
+reduced demand for standard products, and decisions about
+capital-intensive modifications were delayed.
+Class 6 to 8 (8.85 tonnes or heavier) - new registrations
+were markedly higher (+13.0%) than the previous year's
+figure. In Brazil, the largest market in the South America
+region, demand for trucks in the reporting year was
+approximately 44% above the level seen in the previous year.
+The strong competitive and price pressures remained
+unchanged due to the ongoing negative effects of the Covid-
+19 pandemic.
+continued, but weakened in the latter months of the
+reporting period owing to the semiconductor shortage.
+Overall, the volume of demand totaled 20.8 million units,
+thus moderately exceeding the prior-year figure by 4.4%. In
+India, passenger car sales rose substantially by 26.2% to
+3.0 million units compared with the comparatively weak
+prior-year figure. In the Japanese passenger car market, the
+number of new passenger cars registered in the reporting
+period was moderately down on the previous year at
+3.7 million units (-3.2%).
+Business Development
+101
+There was a slight year-on-year decrease in demand for
+light commercial vehicles in the Asia-Pacific region in 2021,
+which was down by 1.2%. Registration volumes in China, the
+region's dominant market and the largest market worldwide,
+were slightly lower, falling 2.4% short of the prior-year figure.
+The number of new vehicle registrations in India was
+significantly (–14.3%) lower than the prior-year level; in Japan
+this figure was moderately (-3.7%) down year-on-year.
+previous year, which had been affected by the pandemic as of
+the last third of the first quarter and particularly in the
+second quarter of 2020. In the second half of 2021, the
+number of new passenger cars registered declined month-on-
+month, in some cases substantially. This was due to the
+market recovery that had been experienced in the previous
+year, and, in particular, to the semiconductor shortage which
+reduced vehicle availability. Nevertheless, with the exception
+of Spain (-0.9%), the performance of the large individual
+passenger car markets was positive on the whole in fiscal year
+2021 France (+0.5%), United Kingdom (+1.0%) and Italy
+(+5.6%).
+The volume of new registrations for light commercial
+vehicles in Western Europe was moderately higher than in the
+previous year, increasing by 4.4%.
+In the Central and Eastern Europe region, the market
+volume of passenger cars in fiscal year 2021 stood at
+2.9 million vehicles, a modest 2.8% more than in the previous
+year, which had been strained by the pandemic. Here, the
+development of demand in the reporting period differed
+from market to market. In Central Europe, the number of new
+registrations saw a slower rate of growth on the whole, with a
+rise of 1.4% to 1.1 million units. By contrast, sales of passen-
+ger cars in Eastern Europe rose at a somewhat faster pace
+(+3.8%) to 1.8 million units. Here, the absolute growth in
+demand was mainly attributable to a higher level of new
+registrations in Russia (+2.6%).
+The market volume of light commercial vehicles in
+Central and Eastern Europe was significantly higher year-on-
+year (+12.1%). In Russia, the number of vehicles sold in the
+reporting period was distinctly higher than in the previous
+year with a 7.5% increase.
+In the reporting period, the market volume of passenger
+cars in Turkey was distinctly lower than in the prior year,
+down 6.9%. In South Africa, the number of passenger cars
+sold in 2021 was substantially (+21.7%) higher than the very
+weak prior-year figure.
+Germany
+New passenger car registrations in Germany in fiscal year
+2021 stood at 2.6 million units, falling noticeably (-10.1%)
+short of the previous year's weak level and thus declining to
+the lowest level since German reunification. Along with the
+effects of the Covid-19 pandemic, this was attributable to
+early purchases made in 2020 due to the expiry of the
+temporary reduction in value-added tax and to the
+deterioration in the supply situation as a result of the semi-
+conductor shortage.
+Owing to a lack of semiconductor deliveries and related mea-
+sures such as cutbacks in production and production shut-
+downs, domestic production and exports in the reporting
+period also fell short again of the comparable prior-year
+figures: passenger car production decreased by 11.9% to
+3.1 million vehicles and passenger car exports fell by 10.3% to
+2.4 million units.
+In the reporting period, the volume of new registrations
+of light commercial vehicles was moderately down (−3.9%) in
+Turkey compared with the prior-year figure; in South Africa,
+by contrast, substantial growth (+22.3%) was recorded.
+Asia-Pacific
+Sales of light commercial vehicles in Germany in the
+reporting period were down by a slight 1.8% on the 2020
+figure.
+102
+In the Asia-Pacific region, the volume of the passenger car
+market in fiscal year 2021 rose to 32.7 million units,
+moderately (+5.0%) higher than the prior-year figure, which
+had been considerably impacted by the SARS-CoV-2 virus.
+Over half of the absolute rise in demand for passenger cars in
+the region was attributable to the favorable trend in the
+Chinese passenger car market, where the signs of a recovery
+that had begun during the second half of 2020 initially
+units.
+In the South America region, the volume of new registrations
+for passenger cars and light commercial vehicles in the 2021
+reporting period was on the whole significantly higher at
+3.5 million units (+12.9%) than the previous year's weak level,
+which had been very severely affected by the impact of the
+Covid-19 pandemic. At 2.0 million vehicles, the volume of new
+registrations in Brazil was up slightly (+1.1%) on the prior-
+year figure. Total exports of vehicles manufactured in Brazil
+increased by +16.0% to 376 thousand passenger cars and
+commercial vehicles. In the Argentinian market, demand for
+passenger cars and light commercial vehicles in the 2021
+reporting period rose noticeably by 9.7% to 356 thousand
+Business Development
+South America
+At 17.7 million vehicles, sales of passenger cars and light
+commercial vehicles (up to 6.35 tonnes) in the North America
+region in fiscal year 2021 showed moderate growth of 3.9%
+on the prior-year figure, which had been impacted by the
+negative effects of the Covid-19 pandemic. However, this
+growth weakened during the second half of the year mainly
+due to supply bottlenecks for semiconductors. In this region,
+the market volume in the USA also rose moderately year-on-
+year to 15.1 million units (+3.4%), although the momentum
+was also weaker. Of the light commercial vehicles, the SUV
+models in particular benefited from this increase. The
+Canadian automotive market saw a distinct rise in sales in the
+reporting period (+6.7%). In Mexico, new registrations for
+passenger cars and light commercial vehicles were up 6.8%,
+also distinctly higher than the comparable prior-year figure.
+North America
+Group Management Report
+Amount utilized
+on Dec. 31, 2021
+€ billion
+Bonds
+8.1
+44.4
+Commercial paper
+The proportion of fixed-rate instruments in the past year
+was about three times as high as the proportion of floating-
+rate instruments.
+The table below shows how our money and capital
+market programs were utilized as of December 31, 2021 and
+illustrates the financial flexibility of the Volkswagen Group:
+Programs
+transactions with a total volume of €2.75 billion were placed.
+Public ABS transactions were also issued in the USA, China,
+Japan, Australia and Brazil.
+In our refinancing arrangements, we generally aim to
+exclude interest rate and currency risk as far as possible with
+the simultaneous use of derivatives.
+175.0
+The Volkswagen Group was also actively involved in the
+commercial paper market with several issuing companies.
+Authorized
+volume
+€ billion
+95.2
+VOLKSWAGEN AG
+14.3
+Asset-backed securities
+93.5
+46.0
+117
+118
+Shares and Bonds
+RATINGS
+2021
+VOLKSWAGEN FINANCIAL
+Alongside the placement of senior, unsecured bonds,
+asset-backed securities (ABS) transactions were another
+element of our refinancing activities. In Europe, public ABS
+VOLKSWAGEN
+BANK GMBH
+of which hybrid issues
+Official euro benchmark bonds with an aggregate volume
+of €8 billion were issued for the Financial Services Division.
+In addition to this, securities were issued in various cur-
+rencies and regions.
+> 1 to < 5 years
+Notes with a volume of CAD 1.0 billion were issued in the
+Canadian refinancing market. In addition, private placements
+in euros and Chinese yuan were issued under the automotive
+issuance program.
+SERVICES AG
+Money and capital
+market instruments
+Maturities
+Currencies
+< 1 year
+29%
+EUR
+61%
+Bonds
+64%
+51%
+Shares and Bonds
+Asset-backed securities
+31%
+≥ 5 years
+20%
+USD
+15%
+In March 2021, TRATON Finance Luxembourg S.A., an
+indirect subsidiary of TRATON SE, issued senior notes in the
+bond market with a total volume of €3.0 billion. In the
+remainder of the year, there were three private placements in
+euros. TRATON SE also borrowed €700 million through prom-
+issory note loans.
+Others
+24%
+10
+20
+30
+40
+50
+60
+70
+80
+90
+100
+REFINANCING
+High cash inflows from operating activities and the robust
+net liquidity position significantly reduced the transaction
+volume in the Automotive Division's capital markets busi-
+ness year-on-year.
+On February 11, 2022, the hybrid notes issued in March
+2015 with a principal amount of €1.1 billion were canceled
+with effect from March 20, 2022.
+0
+2020
+This credit facility was unused as of the end of 2021.
+2020
+P-2
+P-2
+P-2
+A3
+A3
+A3
+stable
+negative
+stable
+P-2
+A3
+negative
+P-1
+A1
+stable
+P-1
+A1
+negative
+outlook
+Baal
+negative
+negative
+Volkswagen AG's syndicated credit line of €10.0 billion agreed
+in December 2019 was extended by one year to 2026 by
+making use of the second extension option.
+In November 2021, Volkswagen AG concluded for the first
+time a loan with terms tied to achieving a sustainability
+target (sustainability linked loan). The interest rate on the
+three-year €1.8 billion agreement depends on the Volkswagen
+Group achieving its CO2 fleet emission target in Europe.
+Of the syndicated credit lines with a total of €12.8 billion
+at other Group companies, €0.8 billion has been drawn down.
+The Volkswagen Group continued to have bilateral confirmed
+credit lines with national and international banks in various
+countries for a total of €5.6 billion, of which €0.7 billion was
+drawn down.
+RATINGS
+In April 2021, rating agency Standard & Poor's affirmed its
+short-term and long-term ratings for Volkswagen AG and
+Volkswagen Financial Services AG at A-2 and BBB+. The long-
+term rating of BBB for TRATON SE was also confirmed. The
+outlooks on Volkswagen AG, TRATON SE and Volkswagen
+Financial Services AG were revised from “negative” to “stable”
+on stronger-than-expected free cash flow generation in the
+automotive business. In June 2021, Standard & Poor's com-
+pleted a review of different institutions within Germany's
+banking sector precipitated by pandemic-related structural
+changes in the banking industry. In this context, Volks-
+wagen Bank GmbH's long-term rating was lowered from A-to
+BBB+ with a stable outlook.
+Moody's Investors Service changed the outlook on the
+ratings of Volkswagen AG in March 2021 from "negative" to
+"stable", reflecting the continued recovery in global vehicle
+sales and the expected improvement in Volkswagen's credit
+metrics, and affirmed Volkswagen's short-term P-2 rating
+and long-term A3 rating. In this context, Moody's also left the
+short-term and long-term ratings for Volkswagen Financial
+Services AG unchanged at P-2 and A3 and those for Volks-
+wagen Bank GmbH at P-1 and A1. The outlook for each
+company was revised from "negative" to "stable". For
+TRATON SE, the long-term rating and the outlook were left
+unchanged at Baal and “negative” respectively.
+ESG RATINGS
+Analysts and investors are referring increasingly to company
+sustainability profiles when making their recommendations
+and decisions. They draw on ESG ratings, among other things,
+to evaluate a company's environmental, social and gover-
+nance performance. At the same time, these ratings are
+instrumental in determining whether we are meeting our
+goal in relation to the new Group strategy NEW AUTO, and
+they provide the basis for implementing internal measures.
+After the diesel issue became public knowledge, the
+Volkswagen Group was downgraded significantly in numer-
+ous ESG ratings. With the successful completion of the
+Monitorship and reinstatement of the Group in the UN
+Global Compact, an improvement in ESG performance was
+achieved in the reporting period. The MSCI score thus
+improved from CCC to B and the Sustainalytics ESG risk score
+from “severe” to “medium”. Volkswagen has been reinstated
+in the Dow Jones Sustainability Index Europe since Novem-
+ber 2021. In addition, Volkswagen had a score of A- in the
+CDP climate rating in fiscal year 2021 and a rating of A in the
+Water Disclosure Project (WDP). Both these ratings were
+unchanged.
+144.80
+Commercial paper
+5%
+Baa1
+2021
+long-term
+Moody's Investors Service
+2021
+Group Management Report
+TRATON SE
+2020
+2021
+2020
+Standard & Poor's
+short-term
+A-2
+A-2
+A-2
+A-2
+A-2
+short-term
+long-term
+BBB+
+BBB+
+BBB+
+outlook
+stable
+negative
+stable
+negative
+BBB+
+stable
+A-2
+A-
+negative
+BBB
+stable
+BBB
+negative
+BBB+
+REFINANCING STRUCTURE OF THE VOLKSWAGEN GROUP
+as of December 31, 2021
+177.48
+7 Order book turnover on the Xetra electronic trading platform (Deutsche Börse).
+2021
+CHANGE
+DELIVERIES (UNITS)
+Business Development
+PASSENGER CAR DELIVERIES TO CUSTOMERS BY MARKET¹
+Group Management Report
+Date
+2020
+Apr. 6
+Dec. 30
+Price
+16,251
+13,433
+15,885
+Date
+Nov. 17
+Jan. 13
+Jan. 29
+(%)
+Western Europe
+422,594
++7.1
+222,520
+238,366
+-10.0
+1,065,811
+959,748
+Europe/Other Markets
+-3.1
+2,761,568
+-2.1
+3,779,397
+Italy
+United Kingdom
+France
+of which: Germany
+2,848,474
+409,016
+Dec. 30
+Price
+80
+DJ F M A M JIAS o N D
+DIVIDEND POLICY
+Our dividend policy matches our financial strategy. In the
+interests of all stakeholders, we aim for continuous dividend
+growth that allows our shareholders to participate appro-
+priately in 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)" of this annual report.
+The Board of Management and Supervisory Board of Volks-
+wagen AG are proposing a dividend of €7.50 per ordinary
+share and €7.56 per preferred share for fiscal year 2021. On
+this basis, the total dividend amounts to €3.8 (2.4) billion.
+The payout ratio is based on the Group's earnings after tax
+attributable to Volkswagen AG shareholders. This amounts to
+25.4% for the reporting period and stood at 29.0% in the
+previous year. A payout ratio of at least 30% is one of our
+strategic goals.
+DIVIDEND YIELD
+Based on the dividend proposal for the reporting period, the
+dividend yield on Volkswagen ordinary shares is 2.9 (2.8) %,
+measured by the closing price on the last trading day in 2021.
+The dividend yield on preferred shares is 4.3 (3.2)%.
+DAX +15.8%
+EURO STOXX Automobiles & Parts +25.0%
+EARNINGS PER SHARE
+Group Management Report
+SHAREHOLDER STRUCTURE AS OF DECEMBER 31, 2021
+as a percentage of subscribed capital
+VOLKSWAGEN SHARE DATA
+О
+Shares and Bonds
+115
+Ordinary shares
+Basic earnings per ordinary share were €29.59 (16.60) in
+fiscal year 2021. Basic earnings per preferred share were
+€29.65 (16.66). 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 number of basic and diluted shares is identical, basic
+earnings per share correspond to diluted earnings per share.
+See also "Earnings per share” in the notes to the con-
+solidated financial statements for the calculation of earnings
+per share.
+ESTX Auto & Parts
+Volkswagen ordinary share +51.9%
+Volkswagen preferred share +16.4%
+100
+672
+Date
+Nov. 18
+491
+Jan. 11
+630
+Dec. 30
+DAX¹
+Group Management Report
+1 Effective September 20, 2021, the number of companies that make up the DAX rose
+from 30 to 40.
+Shares and Bonds
+PRICE DEVELOPMENT FROM DECEMBER 2020 TO DECEMBER 2021
+Index based on month-end prices: December 31, 2020 = 100
+200
+180
+160
+140
+120
+114
+Preferred shares
++3.3
+239,167
+-7.5
+336,773
+311,519
+-0.8
+440,326
+436,852
+of which: Brazil
+Argentina
+South America
+125,946
+130,208
+Mexico
++18.3
+83,531
+98,829
+Canada
++3.4
++12.6
+56,186
+57,555
+66,935
+65,549
++84.6
+28,423
+52,481
+Japan
+India
+1.12
+-14.1
+3,301,444
+-12.5
+4,110,782
+3,598,455
+of which: China
+Asia-Pacific
+-2.4
+3,844,679
+248,414
+574,822
+of which: USA
+204,772
+Other Markets
+Russia
+Poland
++1.5
+112,586
+114,250
+of which: Czech Republic
+221,811
+-4.3
+624,815
+Central and Eastern Europe
++3.0
+213,700
+220,148
+Spain
++3.9
+652,819
+647,521
+-7.7
+126,883
++11.8
+784,299
+876,558
+North America
++12.6
+64,693
+72,847
+120,831
+South Africa
+121,129
+121,885
+of which: Turkey
++12.4
+278,104
+312,499
+-4.8
++0.6
+-2.1
+ISIN
+Porsche Automobil Holding SE
+Foreign institutional investors
+%
++51.9
+-1.8
++24.6
+-17.5
++23.4
+Annual high
+Price performance
+€
+183.10
+182.50
+188.00
+173.95
+Annual low
+€
+165.70
+327.20
+101.50
+168.70
+173.25
+1,559
+1,002
+1,002
+1,002
+817
+Share price development²
+2021
+139.10
+2020
+2018
+2017
+Ordinary share
+Closing
+€
+258.40
+170.10
+2019
+€ million
+135.60
+128.70
+185.52
+184.24
+188.50
+178.10
+€
+144.80
+87.20
+246.55
+134.76
+125.35
+factor
+1.16
+1.26
+1.17
+1.17
+Group Management Report
+133.70
+131.10
+€
+Annual low
+Preferred share
+Closing
+Price performance
+€
+177.48
+152.42
+176.24
+Beta factor³
+138.92
+%
++16.4
+-13.5
++26.9
+-16.5
++24.8
+Annual high
+166.45
+DE0007664005
+on preferred shares
+1,416
+MSCI Euro
+Berlin, Dusseldorf, Frankfurt, Hamburg,
+Hanover, Munich, Stuttgart, Xetra
+SHAREHOLDER STRUCTURE AS OF DECEMBER 31, 2021
+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, 2021
+is shown in the chart on this page.
+The distribution of voting rights for the 295,089,818
+ordinary shares was as follows at the reporting date:
+Porsche Automobil Holding SE, Stuttgart, held 53.3% 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 9.7% of ordinary shares were in free float.
+Notifications of changes in voting rights in accordance
+with the Wertpapierhandelsgesetz (WpHG German
+Securities Trading Act) are published on our website at
+https://www.volkswagenag.com/en/Investor Relations/news-
+and-publications/Voting_Rights.html.
+EURO STOXX
+Automobiles & Parts,
+Prime All Share,
+116
+VOLKSWAGEN SHARE KEY FIGURES
+Group Management Report
+Dividend development
+2021
+2020
+2019
+2018
+Shares and Bonds
+2017
+DAX, CDAX,
+EURO STOXX,
+EURO STOXX 50,
+VOW3
+31.4
+WKN
+27.0
+Deutsche Börse/Bloomberg
+766400
+VOW
+Qatar Holding LLC
+State of Lower Saxony
+Private shareholders/Others 16.0
+German institutional investors 3.3
+VOWG_p.DE
+10.5
+11.8
+VOWG.DE
+CDAX, Prime All
+Share, MSCI Euro,
+Primary market indices
+S&P Global 100 Index
+Exchanges
+DE0007664039
+766403
+Reuters
+1,151
+Number of no-par value shares at Dec. 31
+thousands
+7.56
+4.86
+4.86
+4.86
+3.96
+€ million
+3,772
+€
+2,419
+2,419
+1,967
+on ordinary shares
+€ million
+2,213
+1,416
+1,416
+2,419
+Ordinary shares
+3.90
+4.80
+295,090
+295,090
+295,090
+Preferred shares
+thousands
+206,205
+206,205
+4.80
+206,205
+295,090
+206,205
+Dividend¹
+per ordinary share
+per preferred share
+Dividend paid¹
+€
+7.50
+4.80
+295,090
+206,205
+Worldwide
+3,698,882
+ŠKODA
+Earnings per ordinary share4
+Key figures per share
+0.77
+0.60
+0.72
+0.64
+0.78
+2021
+factor
+117.1
+121.8
+127.0
+144.4
+€ billion
+Equity attributable to Volkswagen AG share-
+holders and hybrid capital investors at Dec. 31
+Ratio of market capitalization to equity
+84.1
+108.8
+69.7
+2020
+2018
+Equity attributable to Volkswagen AG share-
+22.28
+23.57
+26.60
+16.60
+29.59
+€
+2019
+22.28
+26.60
+16.60
+29.59
+€
+diluted
+basic
+2017
+23.57
+holders and hybrid capital investors at Dec. 31
+87.5
+112.8
+EQUITY MARKETS AND PERFORMANCE OF THE PRICE OF
+VOLKSWAGEN'S SHARES
+The price of our ordinary shares, in particular, was higher at the end of 2021
+than before the pandemic.
+During the reporting period trading in Volkswagen AG's ordinary and preferred shares
+continued to recover from the sharp fall in share prices in 2020.
+113
+Shares and Bonds
+Shares and Bonds
+Group Management Report
+The recovery on the international stock markets, which began
+over the course of 2020, after the sharp falls in share prices
+triggered by the Covid-19 pandemic, continued to be strong
+for the most part of fiscal year 2021. Optimism was wide-
+spread, despite fears of setbacks in tackling the pandemic and
+of the resulting prolongation of restrictions to public life and
+the corresponding impact on economic growth.
+C
+In the reporting period the Volkswagen Group produced
+8,282,954 vehicles (including the Chinese joint ventures),
+6.9% less than in the same period of the previous year. The
+prior year had been marked by the impact of national
+measures to contain the pandemic, which had led to the
+PRODUCTION
+17,579
+14,062
+Power Engineering
+Financial Services
+99,626
+Passenger Cars 541,522
+Commercial Vehicles
+disruption of supply chains with production subsequently
+81.6
+The DAX recorded an increase of 15.8% compared with
+the end of 2020. Germany's benchmark index remained
+largely unperturbed by the continuing spread of the SARS-
+CoV-2 virus, although the dynamic pace of increase in the
+second quarter transitioned into sideways movement and
+then started a year-end rally, which was, however, over-
+shadowed by renewed increases in infection rates. The main
+drivers of this positive development were the progress made
+in the vaccination campaigns and the continued economic
+stimulus by central banks and governments all around the
+world, as well as an emerging recovery in the global economy.
+Support also came from gains in automotive stocks. In
+contrast, the concerns of market participants regarding rising
+inflation had a negative impact, as did lack of parts availa-
+bility due to supply bottlenecks.
+Covid-19 pandemic, with the ordinary shares performing
+especially positively. The encouraging performance of Volks-
+wagen shares was based firstly on the good business
+performance in the reporting year, especially in the first six
+months. Secondly, the new Group strategy NEW AUTO,
+including the Group's plans to accelerate the expansion of e-
+mobility and the associated battery technology, was well
+received by investors. The continued strained situation
+relating to the supply of semiconductors had a negative
+impact.
+€ billion
+Market capitalization at Dec. 31
+246.55
+Price (€)
+Preferred share
+Dec. 30
+Jan. 12
+Volkswagen AG's preferred and ordinary shares recovered
+from the loss in value caused by the pandemic. Their prices
+were up by 16% and 52% respectively compared to the end of
+2020. As a result, their value was higher than before the
+258.40
+327.20
+Mar. 18
+Price (€)
+Date
+Ordinary share
+Closing
+Low
+High
+VOLKSWAGEN SHARE KEY FIGURES AND MARKET INDICES
+FROM JANUARY 1 TO DECEMBER 31, 2021
+165.70
+€
+288.15
+253.44
+49.8
+58.8
+€ billion
+million shares
+Turnover of Volkswagen preferred shares
+23.6
+28.0
+20.9
+41.0
+21.6
+million shares
+3.5
+4.3
+3.3
+3.1
+6.1
+€ billion
+23.3
+Turnover of Volkswagen ordinary shares
+54.1
+300.4
+6 Dividend per share based on the year-end-closing price.
+5 Ratio of year-end-closing price to earnings per share.
+4 For the calculation see "Earnings per share" in the notes to the consolidated financial
+statements. 2017 figure adjusted (IFRS 9).
+3 For the calculation see chapter "Results of Operations, Financial Position and Net
+Assets" of this annual report.
+2 Xetra prices.
+1 Figures for the years 2017 to 2020 relate to dividends paid in the following year.
+For 2021, the figures relate to the proposed dividend.
+5.4
+45.1
+5.4
+346.6
+266.0
+4.6
+4.7
+6.6
+%
+Volkswagen share of total DAX turnover
+361.2
+312.3
+2017
+2018
+2019
+6.6
+9.1
+6.0
+Volkswagen Passenger Cars
+Preferred share
+7.5
+5.9
+5.9
+6.5
+8.7
+factor
+Ordinary share
+Price/earnings ratio
+217.13
+233.63
+242.93
+10.2
+7.3
+Dividend yield
+Ordinary share
+2020
+2021
+Stock exchange turnover?
+2.4
+3.5
+2.8
+3.2
+2.3
+3.5
+2.8
+2.8
+223
+4.3
+%
+2.9
+%
+Preferred share
+as of December 31, 2021
+EMPLOYEES BY DIVISION/BUSINESS AREA
+factor
+Including the Chinese joint ventures, the Volkswagen Group
+employed an average of 667,647 people in fiscal year 2021, an
+increase of 0.3% year-on-year. In Germany, we employed
+294,479 people on average; at 44.1 (44.4)%, their share of the
+total headcount was slightly below the level of the previous
+year.
+Russia
+of which: Germany
+of which: EU27+3
+Europe/Other Markets
+COMMERCIAL VEHICLE DELIVERIES TO CUSTOMERS BY MARKET¹
+In the Asia-Pacific region, the Volkswagen Group sold
+12,140 vehicles in the reporting year; among these, 11,262
+were trucks and 860 were buses. Overall, this was 6.3% more
+than in the previous year.
+Deliveries in South America increased to a total of 77,774
+vehicles (+57.5%) in 2021, of which 72,955 were trucks and
+4,812 were buses. Sales in Brazil were up by 59.1%. Of the
+units delivered, 61,571 were trucks and 3,434 were buses. From
+July 1, 2021, the figures also include Navistar's sales (873).
+Turkey
+Sales in North America rose in the reporting year to
+31,869 vehicles (1,502); this included 25,815 trucks and 6,054
+buses. From July 1, 2021, the figures also include Navistar's
+sales (29,003) whose vehicles were above all handed over to
+customers in the United States.
+In fiscal year 2021, deliveries in Turkey increased to 4,398
+(2,681) vehicles. Trucks accounted for 4,204 units and buses
+In Russia, sales rose year-on-year to 11,293 (8,486) units,
+comprising 11,232 trucks and 61 buses.
+In the 27 EU states excluding Malta, but plus the United
+Kingdom, Norway and Switzerland (EU27+3), sales in the
+reporting period were up by 13.2% on the previous year to a
+total of 119,029 units, of which 92,038 were trucks and 5,451
+were buses. Here, the MAN brand delivered 21,540 vehicles
+from the MAN TGE van series.
+In fiscal year 2021, the Volkswagen Group delivered +42.6%
+more commercial vehicles to customers worldwide than in
+the same period of the previous year, when demand was
+affected by a slump in core markets, which had been further
+intensified by the uncertainty generated by the Covid-19 pan-
+demic. We delivered a total of 271,210 commercial vehicles to
+customers. Trucks accounted for 230,151 units (+47.2%) and
+buses for 18,857 units (+16.6%). A total of 22,202 (+25.9%)
+vehicles from the MAN TGE van series were delivered. From
+July 1, 2021, the figures also include Navistar's sales (29,876).
+COMMERCIAL VEHICLE DELIVERIES
+Group Management Report
+Business Development
+for 28 units, while 166 vehicles from the MAN TGE van series
+were sold. In South Africa, deliveries of Volkswagen Group
+commercial vehicles increased by 26.7% year-on-year to a
+total of 3,942 units; of this figure 3,610 were trucks and 332
+were buses.
+110
+South Africa
+of which: USA
+127,893
+149,427
+(%)
+2020
+2021
+CHANGE
+DELIVERIES (UNITS)
+North America
+1 Prior-year deliveries have been updated to reflect subsequent statistical trends. From July 1, 2021, the figures include Navistar.
+ΜΑΝ
+Scania
+Worldwide
+Asia-Pacific
+of which: Brazil
+South America
+Mexico
+Navistar
++16.8
+109
+77
+Porsche
+Bentley
+Lamborghini
+Audi
+Volkswagen Commercial Vehicles
+SEAT
+-12.6
+Bugatti²
+1,004,816
+-8.1
+5,328,090
+4,896,914
+-5.5
+9,114,804
+The number of active employees in the Volkswagen
+Group rose by 1.6% to 643,297 as of December 31, 2021. In
+addition, 12,341 employees were in the passive phase of their
+partial retirement and 17,151 young people were in
+vocational traineeships. At the end of the reporting year, the
+Volkswagen Group's total workforce grew to a total of
+672,789 employees worldwide. This represents a year-on-year
+increase of 1.5%, mainly due to the inclusion of the Navistar
+workforce. A total of 295,065 people were employed in
+Germany (+0.2%) and 377,724 outside Germany (+2.6%).
+8,610,747
+878,202
+-18.2
+1 Prior-year deliveries have been updated to reflect subsequent statistical trends. The figures include the Chinese joint ventures.
+2 Until October 31, 2021.
+426,641
+63
++10.9
+272,162
++30.8
+11,206
+14,659
++13.1
+470,531
+7,430
+-0.7
+1,692,773
+1,680,512
+-3.2
+371,609
+359,546
++10.3
+8,405
+119,029
+301,915
++13.2
+breaking LNG tankers. In the power plant business, orders
+were won for 66 engines and component sets for 28
+completely knocked down engines of different types with an
+aggregate output of 840 MW. For turbomachinery, we
+received several orders for new applications which were
+driven by the energy transition and decarbonization such as
+carbon capture and storage in Europe and an energy storage
+facility in England.
+In the marine business, for example, orders for 60 dual
+fuel engines were placed in 2021 in a project for ten ice-
+Orders received in the Power Engineering segment in
+2021 amounted to €3.8 (3.4) billion. Engines & Marine Systems
+and Turbomachinery generated more than two-thirds of the
+order volume in a persistently difficult market environment.
+Until October 2020, this included the business of Renk.
+The long-term performance of the Power Engineering busi-
+ness is determined by the macroeconomic environment.
+Individual major orders lead to fluctuations in incoming
+orders during the year that do not correlate with these long-
+term trends.
+ORDERS RECEIVED IN THE POWER ENGINEERING SEGMENT
+Order intake in the bus business recorded a very sharp
+increase year-on-year. This was due to the inclusion of
+Navistar from July 1, 2021. With Navistar's school buses, the
+Volkswagen Group is now represented in North America.
+Orders received for mid-sized and heavy trucks, for buses and
+for commercial vehicles from the MAN TGE van series rose by
+66.5% year-on-year to 359,975 vehicles in 2021. The Navistar
+brand, included from July 1, 2021, contributed to this
+increase. The increase was seen in both the truck and bus
+markets and in the MAN TGE van series segment. The visible
+recovery in the markets since the second half of 2020 also
+continued in the first half of 2021. The second half of 2021
+saw a decline, mainly resulting from falling truck orders in
+Europe.
+VOLKSWAGEN GROUP FINANCIAL SERVICES
+ORDERS RECEIVED FOR COMMERCIAL VEHICLES
+ORDERS RECEIVED IN THE PASSENGER CARS SEGMENT IN
+WESTERN EUROPE
+Sales revenue in the Power Engineering segment was
+largely driven by Engines & Marine Systems and Turbo-
+machinery, which together generated more than two-thirds
+of overall sales revenue. Until October 2020, this included the
+business of Renk.
+Orders in the Power Engineering segment are usually part of
+major investment projects. Lead times typically range from
+just under one year to several years, and partial deliveries as
+construction progresses are common. Accordingly, there is a
+time lag between incoming orders and sales revenue from the
+new construction business.
+DELIVERIES IN THE POWER ENGINEERING SEGMENT
+111
+Business Development
+Group Management Report
+In the reporting period, orders received in Western Europe
+increased by 17.7% compared with the previous year, which
+had been weakened by the pandemic. All key markets
+exceeded the respective prior-year level. The growth rates
+differed in strength from country to country: while Germany
+saw single-digit growth, the United Kingdom, France, Italy
+and Spain were up by more than 20%.
+X
+The Financial Services Division covers the Volkswagen
+Group's dealer and customer financing, leasing, banking and
+insurance activities, fleet management and mobility
+offerings. The division comprises Volkswagen Financial
+Services and the financial services activities of Scania and
+Porsche Holding Salzburg and also includes the contracts
+concluded by our international joint ventures. Since July 1,
+2021, it has also included the financial services business of
+Navistar.
+18.0 million, the total number of contracts at the end of the
+reporting year exceeded the 2020 figure of 17.6 million. The
+customer financing/leasing area accounted for 7.4 million of
+these contracts (-2.8%), while 10.5 million (+5.2%) related to
+the service/insurance area.
+EMPLOYEES
+Global inventories of new vehicles at Group companies and
+in the dealer organization were much lower at the end of the
+reporting period than at year-end 2020.
+105,131
+INVENTORIES
+being halted in the Volkswagen Group. In fiscal year 2021 as
+well, supply shortages, especially for semiconductors,
+resulted in production cutbacks so that the total annual
+production volumes dropped even further. Navistar has been
+included in the Group figures since July 1, 2021. In Germany,
+production contracted by 9.2% to a total of 1,483,281 vehicles.
+The percentage of the Group's total production accounted for
+by Germany fell to 17.9 (18.4)%.
+The Tiguan, Polo, Passat, Jetta, T-Cross, Golf and T-Roc
+from the Volkswagen Passenger Cars brand were our biggest
+sellers last year. The largest increases in unit sales were
+recorded for the ID.4, Tharu and Taigo models from the
+Volkswagen Passenger Cars brand, the Q3 Sportback, Q5 and
+Q4 e-tron from Audi, the CUPRA Formentor and the ŠKODA
+Enyaq. The Porsche Taycan and Bentley Bentayga also
+achieved a strong growth rate.
+The Volkswagen Group's unit sales to the dealer organization
+decreased by 6.3% to 8,575,590 units (including the Chinese
+joint ventures) in the reporting year. Navistar has been
+included in these figures since July 1, 2021. During the
+reporting period, demand in markets around the world
+recovered from the declines in sales in the prior-year period
+precipitated by the Covid-19 pandemic. However, the limited
+vehicle availability due to the semiconductor shortage had a
+detrimental impact. Overall, the unit sales volume fell by
+5.5% outside Germany – especially in China - and unit sales
+decreased by 12.2% in Germany. Growth was recorded in the
+USA and Canada, India and the United Kingdom, in particular.
+At 11.3 (12.1)%, the proportion of the Group's total unit sales
+attributable to Germany was lower than in 2020.
+In the Europe/Other Markets region, the financial services
+business was still impacted by the Covid-19 pandemic in the
+reporting year. The semiconductor shortage also had a
+detrimental effect. At 6.3 (6.3) million, the number of new
+contracts signed in 2021 reached the previous year's level.
+The penetration rate decreased to 48.8 (50.1) %. At
+SALES TO THE DEALER ORGANIZATION
+area.
+In the South America region, the number of new
+contracts signed increased to 332 (318) thousand in the
+reporting year. The penetration rate rose to 34.5 (32.7) %. At
+723 (721) thousand as of December 31, 2021, the total num-
+ber of contracts was higher than the year before. The
+contracts mainly related to the customer financing/leasing
+accounted for 1.9 million contracts (-2.4%) and 1.4 million
+contracts (+12.4%) related to the service/ insurance area.
+Group Management Report
+Business Development
+112
+In North America, the number of new contracts signed
+increased year-on-year by 5.0% to 983 thousand. The ratio of
+leased or financed vehicles to Group deliveries in North
+America fell to 59.9 (67.0) % as deliveries grew at a higher rate
+than new contracts. The number of contracts in North
+America on December 31, 2021 was 3.2 (3.1) million. The
+increase resulted from the number of contracts acquired
+from Navistar. The customer financing/leasing area
+The number of new contracts signed in the Asia-Pacific
+region in the past fiscal year fell by 5.7% to 1.0 million units.
+The ratio of leased or financed vehicles to Group deliveries
+was unchanged at 17.7 (17.7) %. At 2.6 (2.6) million, the total
+number of contracts at the end of the reporting year reached
+the previous year's level. The number of contracts in the
+customer financing/leasing area fell by 5.5% to 1.8 million,
+while it increased by 13.5% to 0.8 million in the service/
+insurance area.
+29,876
+The Financial Services Division's products and services
+were popular in fiscal year 2021, although demand was
+impaired by the Covid-19 pandemic and the limited vehicle
+availability due to the semiconductor shortage. At
+8.6 (8.6) million, the number of new financing, leasing,
+service and insurance contracts worldwide was on the
+previous year's level. The ratio of leased and financed vehicles
+to Group deliveries (penetration rate) in the Financial Ser-
+vices Division's markets rose to 36.1 (35.5) %. As of Decem-
+ber 31, 2021, the total number of contracts was 24.5 million,
+up 1.7% from the end of 2020. The number of contracts in the
+customer financing/leasing area fell by 3.2% to 11.6 million,
+while it increased by 6.4% to 12.9 million in the service/
+insurance area.
+118,102
+24,239
+x
+1,502
+31,869
++26.7
+3,942
++64.0
+X
+2,681
++33.1
+8,486
+11,293
++27.8
++0.9
+32,130
+31,859
+4,398
+5,375
+3,111
+X
+90,366
+1,498
+150,968
++42.6
+190,187
+271,210
++25.4
+11,420
+12,140
++6.3
++59.1
+40,855
+65,005
++57.5
+49,372
+77,774
+72,085
+-2,252
+1,682
+-1,466
+670
+-2,456
+-522
+1,012
+Net other operating result
+9,675
+4.3
+Operating result
+19,275
+Operating return on sales (%)
+7.7
+13,230
+6,664
+6.4
+-7,147
+6,045
+3,012
+-944
+-1,140
+222,884
+-183,937
+-17,267
+Sales revenue
+3.7
+2020
+Cost of sales
+Gross profit
+Distribution expenses
+250,200
+-202,959
+47,241
+206,237
+-167,645
+182,106
+-150,507
+-1,160
+43,963
+-35,314
+-19,228
+38,947
+-18,407
+Administrative expenses
+-10,420
+-9,399
+38,592
+-18,068
+-7,964
+31,599
+8,649
+7,348
+40,778
+-33,430
+13.8
+-615
+Share of profits and losses of equity-accounted
+14,146
+8,891
+5,981
+2,776
+Income tax expense
+-4,698
+-2,843
+-3,179
+-2,228
+11,667
+-1,519
+15,428
+8,824
+10,967
+6,663
+4,462
+2,161
+Noncontrolling interests
+2021
+46
+Earnings after tax
+7.4
+20,126
+-236
+investments
+2,321
+2,756
+2,232
+2,697
+89
+60
+Interest result and Other financial result
+-1,470
+Earnings before tax
+-765
+-469
+-154
+-296
+Financial result
+851
+1,991
+915
+2,227
+-64
+-1,316
+2020
+€ million
+2020
+Sales revenue
+192,767
+30,092
+3,278
+43,963
+270,099
+-19,899
+250,200
+Segment profit or loss
+Group
+(operating result)
+134
+45
+6,045
+20,838
+-1,563
+19,275
+as a percentage of sales
+revenue
+7.6
+14,614
+0.4
+Reconciliation
+Vehicles¹ Power Engineering Financial Services
+-43
+Group Management Report
+Results of Operations, Financial Position and Net Assets
+119
+Results of Operations, Financial
+Position and Net Assets
+Despite the continuing negative impact of the Covid-19 pandemic and, in particular, limited vehicle
+availability as a result of the semiconductor shortage, the Volkswagen Group generated
+significantly higher sales revenue and doubled its operating result in the reporting year.
+The Volkswagen Group's segment reporting comprises the
+four reportable segments of Passenger Cars and Light Com-
+mercial Vehicles, Commercial Vehicles, Power Engineering
+and Financial Services, in compliance with IFRS 8 and in line
+with the Group's internal financial management and reporting
+structures.
+segments are identical to the business areas of the same
+name. The Financial Services Division corresponds to the
+Financial Services segment.
+Total segments
+ACQUISITION OF NAVISTAR
+At Volkswagen, segment profit or loss is measured on the acquired all of the outstanding shares in Navistar Interna-
+basis of the operating result.
+The reconciliation contains activities and other oper-
+ations that do not, by definition, constitute segments. These
+include the unallocated Group financing activities. Consoli-
+dation adjustments between the segments (including the
+holding company functions) are also contained in the recon-
+ciliation. The purchase price allocations for Porsche Holding
+Salzburg and Porsche, Scania, MAN and, since July 2021,
+Navistar are allocated to their corresponding segments.
+The Automotive Division comprises the Passenger Cars
+and Light Commercial Vehicles segment, the Commercial
+Vehicles segment and the Power Engineering segment, as well
+as the figures from the reconciliation. The Passenger Cars and
+Light Commercial Vehicles segment is combined with the
+reconciliation to form the Passenger Cars Business Area,
+while the Commercial Vehicles and Power Engineering
+tional Corporation (Navistar), a US manufacturer of commer-
+cial vehicles. The purchase price of €3.1 billion (USD 3.7 bil-
+lion) was paid in cash. TRATON SE now indirectly holds 100%
+of the shares in Navistar, which was previously accounted for
+using the equity method (interest of 16.7%). The initial
+recognition of the acquisition has not been finalized due to
+the size of the transaction, as the internal reviews of the
+underlying information have not yet been completed. This
+means that the amounts recognized as of December 31, 2021
+are provisional. Total assets increased as a result of the
+addition of the primary assets and liabilities of Navistar and
+of their remeasurement, which was required as part of the
+purchase price allocation. The acquisition resulted in good-
+will in the amount of €2.8 billion to reflect the synergies
+arising from the business with Navistar. These relate partic-
+ularly to the growth in the share of the market, to purchasing,
+KEY FIGURES FOR 2021 BY SEGMENT
+Passenger Cars
+and Light
+Commercial
+Vehicles
+Commercial
+Volkswagen
+At the beginning of July 2021, a TRATON GROUP company
+1.4
+13.8
+7.7
+The sale of MAN Truck & Bus Österreich GesmbH, Steyr/
+Austria (MTBÖ) as part of restructuring measures was com-
+pleted with effect from August 31, 2021. The sale led to the
+recognition of an expense, of which €160 million was mainly
+attributable to impairment losses on property, plant and
+equipment and €144 million to a loss on deconsolidation.
+The total expense of €304 million related to the disposal is
+presented in other operating expenses. The sale of the shares
+EQUITY INVESTMENT IN GOTION HIGH-TECH CO., LTD.
+To expand its battery expertise, Volkswagen acquired an
+interest in Gotion High-Tech Co., Ltd., Hefei/China through
+Volkswagen (China) Investment Co. Ltd., making it the largest
+shareholder of the Chinese battery supplier at 26%. The
+Group spent a total of €1.2 billion on this transaction. The
+investment is accounted for using the equity method.
+Group Management Report
+Results of Operations, Financial Position and Net Assets
+121
+SPECIAL ITEMS
+Special items consist of certain items in the financial state-
+ments whose separate disclosure the Board of Management
+believes can enable a better assessment of our economic per-
+formance.
+In fiscal year 2021, the operating result in the Passenger
+Cars Business Area was affected by negative special items of
+€-0.8 (-0.9) billion in connection with the diesel issue. The
+additional expenses, mainly for legal risks, were offset by
+income from agreements regarding the settlement of damages.
+SALE OF MAN TRUCK & BUS ÖSTERREICH GESMBH,
+STEYR/AUSTRIA
+RESULTS OF OPERATIONS
+Against the backdrop of a global economic recovery and
+despite the continuing impact of the Covid-19 pandemic, and
+in particular limited vehicle availability as a result of the
+semiconductor shortage, the Volkswagen Group generated
+sales revenue of €250.2 billion in fiscal year 2021, 12.3% more
+than in the previous year, despite the decline in unit sales.
+Mix effects, better price positioning, and the good business
+performance of the Financial Services Division and the
+Commercial Vehicles Business Area particularly had a
+positive impact. Bottlenecks in the supply of semiconductors
+and the resulting limited availability of vehicles led to a
+reduction in vehicle sales. Changes in exchange rates also had
+a negative effect. At 82.3 (80.8)%, most of the sales revenue
+was generated abroad. Gross profit increased by €8.3 billion
+to €47.2 billion. The gross margin went up to 18.9 (17.5) %.
+The Volkswagen Group's operating result before special
+items improved by €9.4 billion to €20.0 billion in the
+reporting period. The operating return on sales before special
+items increased to 8.0 (4.8) %. The rise was mainly attributable
+to positive mix effects, improved price positioning and
+positive effects of €2.5 (-0.1) billion from the measurement
+of derivatives to which hedge accounting is not applied (espe-
+cially commodity hedging derivatives). The good business
+performance of the Financial Services Division also made a
+positive contribution. One-off expenses of €0.7 billion for
+restructuring measures were recognized in the Commercial
+Vehicles Business Area. These primarily include expenses
+from the sale of the commercial vehicle plant in Steyr, which
+became effective on August 31, 2021. In addition, incurred
+expenses of €0.5 billion in connection with the EU antitrust
+proceedings against Scania had a negative effect. Special
+items in connection with the diesel issue weighed on the
+operating result, reducing this item by €-0.8 (-0.9) billion.
+The Volkswagen Group's operating profit doubled to
+€19.3 (9.7) billion, resulting in a rise in the operating return
+on sales to 7.7 (4.3)%.
+INCOME STATEMENT BY DIVISION
+€ million
+VOLKSWAGEN GROUP
+AUTOMOTIVE¹
+FINANCIAL SERVICES
+2021
+Results of operations of the Group
+In mid-June 2021, Volkswagen and the Swedish battery cell
+producer Northvolt AB agreed to concentrate production of
+Volkswagen premium cells in Skellefteå/Sweden. In connec-
+tion with this, Volkswagen participated in a financing round
+at Northvolt AB that was proportionate to its shareholding,
+investing a further USD 650 million in the company. Volks-
+wagen also increased its existing convertible loan by a
+further €190 million and, at the same time, converted this
+part of the loan to preferred shares. This increased Volks-
+wagen's ownership interest in Northvolt AB to 23.6%. Due to
+favorable terms and conditions on conversion, the measure-
+ment of the converted loan resulted in non-cash income of
+€62 million. As a result, the carrying amount of the equity
+investment in Northvolt AB rose by €796 million. A con-
+vertible loan of €240 million remains on issue.
+INVESTMENT IN NORTHVOLT AB
+The merger of MAN SE (MAN) with TRATON SE (TRATON) was
+adopted by resolution of the Annual General Meeting of
+MAN SE at the end of June 2021. The merger resolution also
+triggered the process to transfer the shares held by non-
+controlling interest shareholders of MAN to TRATON against
+payment of an appropriate cash settlement (merger squeeze-
+out). In this context, the present value of the put options
+granted, amounting to approximately €587 million, was
+recognized as a current liability directly in equity. The non-
+controlling interests in the Volkswagen Group's equity, as
+well as the retained earnings and other reserves attributable
+to the shareholders of Volkswagen AG declined accordingly.
+The merger of MAN with TRATON was entered in the
+commercial registers for MAN and TRATON on August 31,
+2021. The squeeze-out took legal effect upon entry in the
+commercial register. This was followed at the beginning of
+September 2021 by the disbursement of the cash settlement
+of €70.68 per ordinary and preferred share to the noncon-
+trolling interest shareholders of MAN SE, thus completing the
+MAN SE squeeze-out. The appropriateness of the cash
+settlement is being reviewed by judicial award proceedings
+initiated by noncontrolling interest shareholders who had
+received a settlement as a result of the squeeze-out.
+Capex, including capitalized
+development costs
+16,329
+1,596
+68
+159
+18,152
+346
+18,498
+1 From July 1, 2021, the figures include Navistar.
+120
+Results of Operations, Financial Position and Net Assets
+Group Management Report
+production costs, modularization and the use of shared com-
+ponents, and to the area of research and development. The
+consolidation of Navistar as of July 1, 2021 led to an increase
+of €3.5 billion in the Volkswagen Group's sales revenue as of
+December 31, 2021. Moreover, the transition of the treatment
+of Navistar from equity accounting to consolidation gave rise
+to a non-cash gain of €182 million during initial consoli-
+dation, which was presented in the financial result. Earnings
+after tax including impairment losses on the realization of
+hidden reserves decreased by €0.2 billion.
+EQUITY INVESTMENTS HELD FOR SALE
+In March 2021, Brose Fahrzeugteile SE & Co. Kommandit-
+gesellschaft (Brose) and VW Finance Luxemburg S.A., a sub-
+sidiary of Volkswagen AG, entered into an agreement to
+establish a jointly operated company for the development
+and manufacture of complete seat units, seat structures and
+components, and solutions for the vehicle interior. As part of
+this arrangement, Brose acquired half of the shares of the
+Volkswagen Group company SITECH Sp. z o.o., Polkowice/
+Poland. Brose and Volkswagen each hold 50% of the jointly
+operated company, whereby Brose will take the industrial
+lead. Consequently, Brose will control the jointly operated
+company and Volkswagen, given its significant influence
+following the transaction, will account for the company as an
+associate using the equity method. Once all closing
+conditions had been met, the transaction was completed on
+January 1, 2022. The assets of SITECH were classified as held
+for sale in accordance with IFRS 5 as of the end of the fiscal
+year.
+ESTABLISHMENT OF BUGATTI RIMAC D.O.O.,
+SVETA NEDELJA/CROATIA
+In 2021, the Volkswagen Group and Rimac Automobili d.o.o.,
+Sveta Nedelja/Croatia (Rimac), established Bugatti Rimac d.o.o.,
+which has its headquarters in Sveta Nedelja. Volkswagen
+contributed its consolidated subsidiaries Bugatti Auto-
+mobiles S.A.S, Molsheim/France and initially 51% of Bugatti
+International S.A., Strassen/Luxembourg. After proportional
+profit elimination, the contribution led to a non-cash gain of
+€124 million, which was recognized in the other operating
+result.
+in MTBÖ resulted in a net cash outflow of €199 million, which
+is presented in cash flows from investing activities.
+MERGER OF MAN SE WITH TRATON SE
+2021
+-42
+2 Figures up to October 2020 include Renk.
+87
+12,052
+NET ASSETS
+Consolidated balance sheet structure
+At the end of the reporting year, the Volkswagen Group had
+total assets of €528.6 billion, 6.3% more than one year earlier.
+The increase was mainly attributable to higher earnings, the
+initial consolidation of Navistar and changes in exchange
+rates. A chart showing the structure of the consolidated
+balance sheet as of the reporting date can be found in this
+chapter. The Volkswagen Group's equity rose by €17.4 billion
+to €146.2 billion. The equity ratio went up to 27.6 (25.9)%.
+As of the end of fiscal year 2021, the Group had off-
+balance-sheet commitments in the form of contingent lia-
+bilities in the amount of €9.7 (8.6) billion and in the form of
+financial guarantees in the amount of €1.4 (0.4) billion. In
+addition, there were other financial obligations of €34.7
+(30.3) billion. The contingent liabilities relate primarily to
+legal risks in connection with the diesel issue, as well as to
+potential liabilities from tax risks in the Commercial Vehicles
+Business Area in Brazil. Other financial obligations primarily
+result from purchase commitments for property, plant and
+equipment, irrevocable credit commitments to customers
+and from development and supply contracts. They also
+include commitments to invest in the infrastructure for zero-
+emission vehicles and in initiatives to promote access to and
+awareness of this technology. These commitments were
+made as part of the settlement agreements in the USA in
+Power Engineering
+Noncurrent assets
+1,804
+16,409
+1,847
+2,914
+2,800
+4,718
+4,647
+2,322
+1,922
+524
+668
+Current assets
+1,872
+10,592
+Noncurrent liabilities
+Current liabilities
+93,894
+81,423
+Noncurrent liabilities
+80,621
+82,263
+Current liabilities
+45,704
+49,731
+17,778
+Commercial Vehicles¹
+Noncurrent assets
+Current assets
+Total assets
+24,777
+12,264
+11,256
+46,994
+36,033
+Equity
+12,807
+13,389
+34,730
+Equity
+2,057
+Noncurrent liabilities
+Current liabilities
+170,391
+156,861
+157,871
+77,689
+67,968
+77,290
+67,781
+399
+302,170
+145,309
+187
+63,695
+63,884
+62,684
+62,807
+1,011
+1,077
+Lease assets
+59,699
+Property, plant and equipment
+Total assets
+Equity
+328,261
+Noncurrent assets
+1 From July 1, 2021, the figures include Navistar.
+connection with the diesel issue. The other financial obli-
+gations include an amount of €0.7 (0.9) billion for this pur-
+pose. In the previous year, this item had also reflected the
+payment of the purchase price for the acquisition of all of
+Navistar's outstanding shares totaling around USD 3.7 billion.
+In addition to the other financial obligations, there are pur-
+chase commitments for inventories with a short turnover
+period, which arise primarily from the Master Collaboration
+Agreement with Ford Motor Company for the joint develop-
+ment of vans and mid-sized pickups for the global market.
+As of December 31, 2021, intangible assets in the Automotive
+Division increased, driven among other factors by a rise in
+capitalized development costs. The goodwill recognized as a
+result of the acquisition of Navistar also had to be taken into
+account. Property, plant and equipment was on a level with
+128
+Results of Operations, Financial Position and Net Assets
+CONSOLIDATED BALANCE SHEET BY DIVISION AS OF DECEMBER 31
+€ million
+VOLKSWAGEN GROUP
+Intangible assets
+AUTOMOTIVE¹
+2020
+2021
+Group Management Report
+FINANCIAL SERVICES
+2020
+2021
+2020
+Assets
+2021
+50,686
+213,417
+83,180
+9,103
+1,141
+5,660
+4,550
+3,443
+Cash and cash equivalents at Dec. 315
+39,123
+33,432
+5,691
+24,899
+14,224
+9,674
+Securities, loans and time deposits
+34,515
+32,645
+16,200
+15,868
+18,314
+23,758
+16,777
+0
+-0
+-1,071
+2,984
+-1,575
+2,952
+504
+33
+MAN noncontrolling interest shareholders: compen-
+sation payments and acquisition of shares tendered
+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
+2
+-0
+2
+-745
+839
+-619
+102
+-125
+-1
+-0
+-1
+942
+220,218
+Gross liquidity
+66,078
+Results of Operations, Financial Position and Net Assets
+127
+Financial position in the Financial Services Division
+In fiscal year 2021, the Financial Services Division generated
+gross cash flow of €14.6 (11.3) billion. The increase was mainly
+attributable to improved earnings. The change in working
+capital amounted to €-8.4 (-11.1) billion. A reduction of
+receivables and inventories were set against a rise in lease
+assets and led to a decrease in funds tied up in working
+capital compared with the prior-year period. Cash flows from
+operating activities went up by €6.1 billion to €6.2 billion.
+Investing activities attributable to operating activities
+expanded to €0.4 (0.0) billion. The “Acquisition and disposal
+of equity investments” item went up in the reporting period
+as a result of strategic investments in a number of
+companies.
+The Financial Services Division's financing activities
+relate primarily to the issuance and redemption of bonds and
+other financial liabilities; there was a total cash outflow of
+€-0.4 billion in the reporting period. In the previous year,
+financing activities had accounted for cash inflows of
+€4.7 billion.
+At the end of 2021, the Financial Services Division's nega-
+tive net liquidity, which is common in the industry, was
+€-163.3 billion, compared with €-164.2 billion on Decem-
+ber 31, 2020.
+BALANCE SHEET STRUCTURE OF THE PASSENGER CARS,
+COMMERCIAL VEHICLES AND POWER ENGINEERING
+BUSINESS AREAS
+Group Management Report
+€ million
+Noncurrent assets
+Current assets
+Total assets
+Dec. 31, 2021
+Dec. 31, 2020
+133,857
+130,237
+86,362
+Passenger Cars
+73,637
+6 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).
+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).
+41,099
+39,626
+32,539
+26,451
+Total third-party borrowings
+-210,213
+-203,457
+-14,413
+5 Cash and cash equivalents comprise cash at banks, checks, cash-in-hand and call deposits.
+-12,830 -195,800
+Net liquidity
+-136,576
+-137,380
+26,685
+26,796 -163,261
+-164,176
+1 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.
+2 Net of impairment reversals.
+3 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.
+-190,627
+2,316
+1,512
+57,383
+119,139
+109,398
+Financial liabilities
+131,618
+114,809
+24,639
+15,637
+106,978
+93,523
+99,173
+Other liabilities
+Current liabilities
+Financial liabilities
+41,550
+45,081
+40,769
+44,207
+781
+Provisions for pensions
+874
+98,923
+218,062
+14,439
+15,713
+Equity attributable to Volkswagen AG
+shareholders and hybrid capital investors
+144,449
+127,049
+108,031
+95,626
+202,921
+36,417
+Noncontrolling interests
+1,705
+1,734
+991
+1,107
+714
+627
+Noncurrent liabilities
+31,423
+15,713
+44,894
+33,515
+Other liabilities
+61,948
+54,085
+53,007
+47,107
+8,940
+6,978
+Liabilities associated with assets held for sale
+3,137
+238
+Total equity and liabilities
+528,609
+497,114
+271,930
+254,097
+256,679
+243,017
+1 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions, primarily intragroup loans.
+238
+43,031
+2,647
+20,977
+33,680
+11,379
+9,352
+164,393
+165,410
+63,984
+63,840
+100,409
+19,539
+101,569
+88,648
+-10,237
+-2,806
+88,821
+91,454
+Trade payables
+23,624
+22,677
+78,584
+14,439
+capital investors
+Equity attributable to Volkswagen AG hybrid
+98,808
+97,708
+Inventories
+43,725
+43,823
+40,361
+39,055
+3,363
+97,236
+4,768
+56,498
+58,006
+-936
+-557
+57,434
+58,562
+Other receivables and financial assets
+37,195
+Financial services receivables
+38,044
+101,539
+200,347
+49,174
+Financial services receivables
+84,954
+82,565
+-781
+-377
+85,735
+82,942
+194,944
+Investments, equity-accounted investments and
+financial assets
+42,224
+37,067
+28,882
+25,137
+13,342
+11,930
+Current assets
+other equity investments, other receivables and
+18,275
+17,012
+18,921
+256,679
+243,017
+Equity and liabilities
+Equity
+146,154
+128,783
+109,022
+96,733
+254,097
+37,131
+Equity attributable to Volkswagen AG
+shareholders
+130,009
+111,336
+93,592
+79,913
+36,417
+31,423
+32,050
+271,930
+497,114
+528,609
+21,033
+Marketable securities
+22,532
+21,162
+17,674
+17,503
+4,858
+3,658
+Cash, cash equivalents and time deposits
+39,723
+33,909
+25,491
+24,222
+14,232
+9,687
+Assets held for sale
+674
+674
+Total assets
+-238
+-98
+-590
+-590
+Cash flows from operating activities
+Cash flows from investing activities
+attributable to operating activities
+Net cash flow
+2,382
+2,004
+-4,453
+-1,328
+-2,071
+676
+Power Engineering²
+Gross cash flow
+159
+333
+Change in working capital
+29
+588
+Cash flows from operating activities
+Cash flows from investing activities
+attributable to operating activities
+Net cash flow
+362
+562
+-74
+-274
+-25
+287
+-109
+2,491
+The Volkswagen Group's investing activities attributable
+to operating activities increased by €5.8 billion to €24.2 bil-
+lion in the reporting period, particularly due to the acquisi-
+tion of Navistar for an amount of €2.6 billion (net of the cash
+funds acquired), the capital increase and acquisition of shares
+in Gotion High-Tech in an amount of €1.1 billion and a rise in
+capitalized development costs.
+Financing activities accounted for total cash outflows of
+€−7.8 billion. Financing activities related primarily to the
+redemption of the hybrid note called in the first quarter of
+2021, the dividend paid to the shareholders of Volkswagen AG
+and the issuance and redemption of bonds, as well as to
+changes in other financial liabilities. In the prior-year period,
+there had been a cash inflow of €7.6 billion to boost gross
+liquidity by placing hybrid bonds and issuing the green bond.
+At the end of the reporting period, the Volkswagen Group
+reported cash and cash equivalents of €39.1 (33.4) billion in
+its cash flow statement.
+Gross cash flow
+26,221
+21,823
+Change in working capital
+3,439
+1,845
+331
+29,659
+22,154
+-19,266
+-16,762
+10,393
+5,392
+Commercial Vehicles¹
+Gross cash flow
+Change in working capital
+Cash flows from operating activities
+Cash flows from investing activities
+attributable to operating activities
+Net cash flow
+In the period from January to December 2021, the Volks-
+wagen Group generated gross cash flow of €43.7 (35.0) billion.
+The increase compared with the previous year was largely
+attributable to the improvement in profit. In comparison
+with the previous year, which had been impacted by the pan-
+demic, a decrease in inventories and receivables, a rise in
+lease assets and higher liabilities took the change in working
+capital to €-5.1 (-10.1) billion. Cash outflows attributable to
+the diesel issue were lower than in fiscal year 2020 and
+included the inflows from the agreements regarding the
+settlement of damages. As a result, cash flows from operating
+activities grew by €13.7 billion to €38.6 billion.
+289
+At the end of December 2021, the Volkswagen Group's net
+liquidity stood at €-136.6 billion, compared with €-137.4 bil-
+lion at the end of 2020.
+8.6
+Gross cash flow
+Change in
+working capital
+Capex
+Capitalized
+development costs
+M&A
+Other
+Net cash flow
+0.4
+In the reporting period, cash outflows attributable to the
+diesel issue were lower than in the previous year. This applies
+even if the inflows from the agreements regarding the settle-
+ment of damages are not taken into account. Consequently,
+cash flows from operating activities were up €7.7 billion on
+the previous year, to €32.4 billion.
+Argo AI. In the prior-year period, this item had included the
+sale of the shares in Renk.
+Despite the investment in Navistar (€-2.6 billion), the
+Automotive Division's net cash flow of €8.6 billion in the
+period from January to December 2021 was €2.3 billion
+higher than the comparative figure for 2020.
+In the reporting period, the financing activities of the Auto-
+motive Division resulted in a cash outflow of €-7.4 billion; in
+the prior-year period, there had been a cash inflow of
+€2.9 billion to boost gross liquidity through measures such as
+the placement of hybrid notes and the issuance of the green
+bond. The redemption of the hybrid note called in the first
+quarter of 2021 led to a cash outflow of around €-1.2 billion.
+A dividend totaling €2.4 billion was paid to the shareholders
+of Volkswagen AG in July 2021. Financing activities also
+include the issuance and redemption of bonds and changes
+in other financial liabilities. The "Transactions with noncon-
+trolling interests” item includes the present value of the cash
+settlement for MAN noncontrolling interest shareholders in
+connection with the merger of MAN and TRATON; the settle-
+ment was paid at the beginning of September 2021. In the
+prior-year period, the transfer of all outstanding Audi shares
+to Volkswagen AG had been reported in this item.
+At the end of the reporting year, the Automotive Divi-
+sion's net liquidity was €26.7 billion, compared with
+€26.8 billion on December 31, 2020. With net liquidity almost
+unchanged and a noticeable increase in sales revenue, the
+Automotive Division's net liquidity as a proportion of con-
+solidated sales revenue declined to 10.7 (12.0)% in the
+reporting period.
+126
+Results of Operations, Financial Position and Net Assets
+Group Management Report
+CASH FLOW STATEMENT BY DIVISION
+Investing activities attributable to operating activities
+increased by €5.4 billion to €23.8 billion. Within this figure,
+investments in property, plant and equipment, investment
+property and intangible assets, excluding capitalized develop-
+ment costs (capex) decreased by €0.6 billion to €10.5 billion.
+Thanks to higher sales revenue and a decline in capital expen-
+diture, the ratio of capex to sales revenue was down on the
+prior-year figure, at 5.1 (6.1)%. A considerable portion of
+capex was allocated to our production facilities and to
+models that we launched in 2021 or are planning to launch in
+2022, or for which production is set to start. These are
+primarily vehicles in the ID. family and the new Taigo model,
+the Multivan T7, the next generation of the ŠKODA Fabia as
+well as the Enyaq, CUPRA Born, Audi Q4 e-tron, Audi A8, new
+model variants in the Bentley Bentayga and Flying Spur
+series, and the Porsche Taycan and the Porsche Macan. Other
+investment priorities include the electrification and digitali-
+zation of our products and our modular toolkits and plat-
+forms. Additions to capitalized development costs rose to
+€7.8 (6.5) billion in the reporting period. The "Acquisition
+and disposal of equity investments" item (M&A) expanded by
+€4.7 billion to €5.9 billion as a result of strategic investments
+in a number of companies, in particular Navistar, the associ-
+ates Gotion High-Tech and Northvolt, and the joint venture
+1 From July 1, 2021, the figures include Navistar.
+2 Figures up to October 2020 include Renk.
+90
+125
+Financial position of the Automotive Division
+The Automotive Division recorded gross cash flow of
+€29.0 billion in fiscal year 2021, which exceeded the prior-
+year figure by €5.4 billion due to earnings-related reasons.
+The change in working capital amounted to €3.4 (1.1) billion.
+The rise of €2.3 billion compared with the previous year,
+which had been impacted more severely by the Covid-19
+pandemic, was due to increases in liabilities and in other
+provisions, offset by a smaller decline in inventories.
+Group Management Report
+AUTOMOTIVE DIVISION NET CASH FLOW 2021
+€ billion
+35
+3.4
+30
+-5.9
+29.0
+20
+15
+10
+5
+0
+-10.5
+-7.8
+Results of Operations, Financial Position and Net Assets
+25
+Financial position of the Group
+FINANCIAL POSITION
+Passenger Cars
+Germany 18%
+North America 18%
+South America 4%
+Asia-Pacific 19%
+Passenger Cars
+Commercial Vehicles
+69%
+12%
+Power Engineering 1%
+Financial Services 18%
+The financial result decreased by €1.1 billion year-on-year to
+€0.9 billion. The other financial result included negative
+effects from forward purchase agreements for new shares in
+QuantumScape (€-0.6 billion). In the previous year, the
+measurement and realization of these forward agreements
+had led to a non-cash gain of €1.4 billion. Moreover, the share
+of the result of equity-accounted investments was down on
+the prior-year period. This is primarily attributable to the
+lower profit generated by the Chinese joint ventures, which is
+again a reflection of the bottlenecks in the supply of semi-
+conductors and the resulting limited availability of vehicles.
+The interest expenses included in the financial result
+increased, due mainly to the interest cost on provisions. In
+the previous year, changes in share prices had weighed on net
+income from securities and funds as a result of the Covid-19
+pandemic.
+The Volkswagen Group's profit before tax rose to
+€20.1 (11.7) billion. The return on sales before tax increased
+to 8.0 (5.2) %. Income taxes resulted in an expense of
+€4.7 (2.8) billion in fiscal year 2021, which in turn led to a tax
+rate of 23.3 (24.4) %. Profit after tax went up by €6.6 billion to
+€15.4 billion.
+Other Markets
+Results of operations in the Automotive Division
+In the Passenger Cars Business Area, sales revenue in the
+reporting period increased by a noticeable 10.6%, while the
+Commercial Vehicles Business Area recorded a very strong
+year-on-year rise of 35.8%. In the Power Engineering Business
+Area, sales revenue was 9.9% lower than in fiscal year 2020,
+which had included the business of Renk until October. Since
+our Chinese joint ventures are accounted for using the equity
+method, the Group's business performance in the Chinese
+passenger car market is primarily reflected in the Group's
+sales revenue only through deliveries of vehicles and vehicle
+parts.
+Cost of sales increased, driven by factors such as a rise in
+research and development costs recognized in profit or loss.
+As a result of the marked growth in sales revenue, the ratio of
+cost of sales to sales revenue decreased. Total research and
+development costs as a percentage of the Automotive Divi-
+sion's sales revenue (research and development ratio or R&D
+ratio) was unchanged from the previous year, at 7.6 (7.6)%. In
+addition to new models, our activities focused above all on
+the electrification of our vehicle portfolio, digitalization, new
+technologies and our modular toolkits and platforms.
+There was a year-on-year rise in both distribution and
+administrative expenses in the reporting period. The ratio of
+distribution expenses to sales revenue went down, while the
+ratio of administrative expenses was virtually unchanged.
+The other operating result amounted to €0.7 (-0.5) billion,
+benefiting in particular from the effects of the fair value
+measurement of derivatives to which hedge accounting is not
+applied (especially commodity hedging derivatives) in the
+amount of €2.4 (−0.1) billion, and from currency effects. This
+was set against factors such as negative special items in
+connection with the diesel issue in the Passenger Cars Busi-
+Group Management Report
+Results of Operations, Financial Position and Net Assets
+123
+RESULTS OF OPERATIONS IN THE PASSENGER CARS, COMMERCIAL
+VEHICLES AND POWER ENGINEERING BUSINESS AREAS FROM
+JANUARY 1 TO DECEMBER 31
+€ million
+Despite the decline in unit sales, the Automotive Division's
+sales revenue of €206.2 billion in fiscal year 2021 was 13.3%
+higher than in the prior-year period, which had been more
+severely impacted by the spread of the Covid-19 pandemic
+and its negative consequences. Improvements in the mix and
+in price positioning had a positive effect, while limited
+vehicle availability due to the semiconductor shortage and
+changes in exchange rates had an adverse impact.
+Passenger Cars
+Europe (excluding Germany)/ 40%
+SHARE OF SALES REVENUE BY MARKET 2021
+in percent
+55
+Earnings attributable to Volkswagen AG hybrid
+capital investors
+539
+533
+539
+533
+Earnings attributable to Volkswagen AG
+shareholders
+SHARE OF SALES REVENUE BY DIVISION/BUSINESS AREA 2021
+in percent
+14,843
+10,469
+6,227
+4,374
+2,106
+1 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.
+122
+Results of Operations, Financial Position and Net Assets
+Group Management Report
+8,334
+2021
+Sales revenue
+172,868
+-482
+-13.2
+ness Area which had to be recognized here, an increase in
+provisions in connection with the EU antitrust proceedings
+against Scania in the reporting period and one-off expenses
+for restructuring measures in the Commercial Vehicles Busi-
+ness Area. In addition, the contribution of the two Bugatti
+subsidiaries to the newly established company Bugatti
+Rimac d.o.o. led to a non-cash gain after proportional profit
+elimination. The prior-year figure had included a gain of
+€0.8 billion from the contribution of the consolidated sub-
+sidiary Autonomous Intelligent Driving to Argo AI and a gain
+on the sale of the shares in Renk.
+The Automotive Division's operating result doubled to
+€13.2 (6.7) billion in the reporting period. The operating
+return on sales of the Automotive Division climbed to
+6.4 (3.7)%. Positive factors included favorable price posi-
+tioning, the fair value measurement of derivatives to which
+hedge accounting is not applied and changes in the mix.
+Negative special items attributable to the diesel issue were
+down on the previous year. These factors were offset by
+limited vehicle availability as a result of the semiconductor
+shortage, an increase in provisions in connection with the EU
+antitrust proceedings against Scania in the reporting period,
+and one-off expenses for restructuring measures in the
+Commercial Vehicles Business Area.
+The operating result before special items increased by
+€6.4 billion to €14.0 billion, while the operating return on
+sales before special items went up to 6.8 (4.2)%.
+Our operating result largely benefits from the business
+performance of our equity-accounted Chinese joint ventures
+only through deliveries of vehicles and vehicle parts and
+through license income, as these joint ventures are included
+in the financial result.
+Results of operations in the Financial Services Division
+The Financial Services Division's sales revenue amounted to
+€44.0 billion in fiscal year 2021, 7.8% more than in the prior-
+year period. Cost of sales increased slightly more slowly than
+sales revenue, rising by 5.6% to €35.3 billion.
+The Financial Services Division's operating result grew by
+€3.0 billion to €6.0 billion thanks to improved business
+performance, which was driven above all by strong demand
+for used vehicles, and lower risk costs for credit and residual
+value risks. The operating return on sales increased to
+13.8 (7.4) %. The return on equity before tax almost doubled
+to 17.3 (8.8)%.
+1.4
+Principles and goals of financial management
+Financial management in the Volkswagen Group covers
+liquidity management, the management of currency, interest
+rate and commodity price risks, and credit and country risk
+management. It is performed centrally for all Group com-
+panies by Group Treasury, based on internal guidelines and
+risk parameters. Some functions of the MAN Energy Solu-
+tions, Porsche Holding Salzburg and TRATON subgroups and
+of the Financial Services Division are included in the financial
+management and, in addition, have their own financial
+management structures.
+124
+Results of Operations, Financial Position and Net Assets
+Group Management Report
+relevant risk limits and the authorized financial instruments,
+hedging methods and hedging horizons are approved by the
+Group Board of Management Committee for Risk Manage-
+ment. For additional information on the principles and goals
+of financial management, please refer to the chapter on
+“Financial risk management and financial instruments" in
+the notes to the consolidated financial statements.
+FINANCIAL POSITION IN THE PASSENGER CARS, COMMERCIAL
+VEHICLES AND POWER ENGINEERING BUSINESS AREAS FROM
+JANUARY 1 TO DECEMBER 31
+€ million
+2021
+2020
+The goal of financial management is to ensure that the
+Volkswagen Group remains solvent at all times and at the
+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 overriding
+aim of currency, interest rate and commodity risk manage-
+ment is to hedge, using derivative financial instruments and
+commodity forwards, the prices on which investment,
+production and sales plans are based when making planning
+assumptions and to mitigate interest rate risks incurred in
+financing transactions. In the management of credit and
+country risk, diversification is used to limit the Volkswagen
+Group's exposure to the so-called counterparty risk. To
+achieve this, counterparty risk management imposes internal
+limits on the volume of business allowed per counterparty
+when financial transactions are entered into. Various credit
+rating criteria are applied in this process. These focus
+primarily on the capital resources of potential counterparties,
+as well as the ratings awarded by independent agencies. The
+45
+3,640
+3,278
+Operating result
+13,051
+Operating return on sales (%)
+7.5
+Commercial Vehicles¹
+Sales revenue
+30,092
+Operating result
+134
+Operating return on sales (%)
+0.4
+Power Engineering²
+Sales revenue
+Operating result
+Operating return on sales (%)
+1 From July 1, 2021, the figures include Navistar.
+2020
+156,311
+7,224
+4.6
+22,156
+-79
+-0.4
+€ million
+-238
+VOLKSWAGEN GROUP
+FINANCIAL SERVICES
+-97
+32,402
+-72
+4,442
+332
+24,721
+6,231
+180
+Cash flows from investing activities attributable to operating
+activities
+24,901
+-24,181
+-23,793
+-18,364
+-388
+-8
+of which: investments in property, plant and equipment,
+investment property and intangible assets, excluding capitalized
+development costs
+-10,655
+-11,273
+-10,496
+-18,372
+-11,065
+38,633
+260
+-153
+678
+Change in other provisions
+951
+-2
+938
+-214
+14
+Cash flows from operating activities
+211
+-16,205
+-12,914
+-536
+52
+-15,669
+-12,966
+Change in financial services receivables
+4,345
+Change in lease assets (excluding depreciation)
+-138
+-159
+capitalized development costs
+-3,015
+-1,015
+-1,304
+Cash flows from investing activities
+-26,128
+-22,690
+-24,726
+-21,379
+-933
+-1,403
+Cash flows from financing activities
+-7,754
+7,637
+-7,375
+2,938
+-380
+4,699
+of which: capital transactions with noncontrolling interests
+capital contributions/capital redemptions
+-1,312
+-208
+-4,319
+Change in investments in securities, loans and time deposits
+-7,843
+-6,473
+-7,843
+-6,473
+acquisition and disposal of equity investments
+-6,151
+-1,037
+-5,882
+-1,948
+-1,188
+151
+Net cash flow
+14,453
+6,529
+8,610
+6,357
+5,843
+172
+-268
+AUTOMOTIVE¹
+2,009
+1,856
+-2,646
+-3,329
+-2,009
+-887
+-637
+Depreciation and amortization expense²
+27,473
+27,069
+-4,216
+18,378
+9,094
+9,272
+Change in pension provisions
+992
+806
+947
+767
+45
+17,798
+39
+Income taxes paid
+5,981
+2021
+2020
+2021
+2020
+2021
+2020
+Cash and cash equivalents at beginning of period
+33,432
+2,776
+24,329
+18,098
+9,674
+6,231
+Earnings before tax
+20,126
+11,667
+14,146
+8,891
+23,758
+540
+Share of the result of equity-accounted investments
+536
+1,079
+-8,415
+-11,148
+Change in inventories
+2,110
+1,334
+624
+1,406
+3,358
+1,486
+Change in receivables
+Change in liabilities
+1,888
+712
+421
+45
+1,466
+668
+-72
+-10,070
+-5,056
+Change in working capital
+839
+584
+-52
+-48
+Other noncash income/expense and reclassifications³
+-1,473
+-2,461
+-1,938
+-2,388
+465
+-73
+Gross cash flow
+43,690
+34,971
+29,044
+23,642
+14,646
+11,329
+787
+Automotive Division balance sheet structure
+CONSOLIDATED BALANCE SHEET STRUCTURE 2021
+Group Management Report
+Reinstatement in the UN Global Compact
+Furthermore, the Council launched a project to examine
+the importance of digitalization for sustainability as well as a
+study on the potential of future forms of work and training.
+In the reporting period, the research project with the
+Mercator Research Institute on Global Commons and Climate
+Change begun in 2020 focused on dialogue and initial
+analyses of the inclusivity and effectiveness of climate legis-
+lation in the transport sector.
+Corporate citizenship
+As a good corporate citizen, we aim to be a constant source of
+economic impetus for local structural development and
+equal opportunities. We have always believed in the impor-
+tance of recognizing our social responsibilities toward our
+stakeholders. The main focus of our corporate social engage-
+ment activities is on supporting future, educational and
+community projects at many of our sites across the world. In
+2021, the brands and companies launched or continued
+around 800 projects and initiatives worldwide.
+i CSR-PROJECTS
+https://www.volkswagenag.com/en/sustainability/reporting/cc-projects.html
+1,609
+Retained profits brought forward
+65,487
+66,312
+Short-term debt
+Dialogue between Volkswagen and the Sustainability
+Council in 2021 focused on the new Group strategy NEW
+AUTO and on the topics of ESG, decarbonization, sustainable
+supply chains, circular economy, diversity and workforce
+transformation. Following the discussions, the Sustainability
+Council submitted two letters of recommendation on these
+aspects to the Group Board of Management.
+6,338
+Net income for the fiscal year
+36,348
+38,087
+Medium-term debt
+6,338
+4,041
+Earnings after tax
+18
+43,086
+40,748
+Long-term debt
+-693
+4,041
+The Sustainability Council set up in 2016 provides assistance
+to the Volkswagen Group with important, strategic sustain-
+ability issues and is made up of internationally renowned
+experts from the academic world, politics and society. This
+advisory body establishes its own working methods and
+areas of focus independently, has far-reaching rights for the
+purposes of exchanging information, consultation and initi-
+ating action, and consults regularly with the Board of
+Management, top management and the employee represen-
+tatives.
+Sustainability Council
+Group Management Report
+THE VOLKSWAGEN GROUP'S STAKEHOLDERS
+RESIDENTS &
+LOCAL
+AUTHORITIES
+Bill
+NGOS &
+CHARITABLE
+ASSOCIATIONS
+SUSTAINABILITY COUNCI
+POLICY
+MAKERS
+MEDIA
+CUSTOMERS
+VOLKSWAGEN
+GROUP
+EMPLOYEES
+SUPERVISORY
+INVESTORS &
+ANALYSTS
+WORKS
+BOARD
+COUNCIL
+ACADEMIA &
+EXPERTS
+BUSINESS
+PARTNERS &
+SUPPLIERS
+2
+COMPETITORS
+stakeholder groups of importance around this core. The
+Group's supervisory and advisory bodies such as the
+Supervisory Board, the Works Council and the Sustainability
+Council act as interfaces between internal and external
+stakeholders.
+We understand stakeholder management as systematic,
+continuous interaction with key interest and stakeholder
+groups in line with our new Group strategy NEW AUTO. Our
+stakeholder management aims to actively shape and promote
+an open, constructive and also critical exchange with non-
+profit organizations (NGOs), investors, business partners,
+associations, policymakers and the scientific community
+regarding their requirements and expectations, as well as
+central strategic issues and their implementation.
+To be able to systematically incorporate our stakeholders'
+suggestions and recommendations, we have given our
+stakeholder management an organizational structure in the
+form of external committees. At Group level, these are the
+Sustainability Council mentioned above and the Stakeholder
+Panel. The latter once again took a break in 2021 due to the
+pandemic. In addition, we offer our stakeholders a broad
+range of opportunities for interaction and feedback channels
+including regular discussion panels with stakeholders, stake-
+holder surveys and international cooperative projects.
+138
+Sustainable Value Enhancement
+-1,091
+Our stakeholders are individuals, groups, or organizations
+who have an influence on or are influenced by the course or
+the result of corporate decisions. Our customers and employ-
+ees are at the center of our stakeholder network. Based on our
+annual stakeholder analysis, we have identified eight more
+Taxes on income
+Special tax-allowable reserves
+3,494
+Gross profit on sales
+-67,424
+Cost of sales
+70,917
+Sales
+2020
+2021
+€ million
+2020
+2021
+67,535
+-63,418
+4,117
+BALANCE SHEET OF VOLKSWAGEN AG AS OF DECEMBER 31
+INCOME STATEMENT OF VOLKSWAGEN AG
+Taxes on income rose to €-1.1 (-0.7) billion, particularly
+due to higher tax expenses for prior years. Net income for
+fiscal year 2021 thus amounted to €4.0 (6.3) billion.
+The financial result went down by €1.2 billion to €8.5 bil-
+lion, mainly because of a decline in income from profit
+transfers.
+The other operating result decreased by €0.3 billion to
+€0.1 billion. The decline was due in particular to increased
+expenditure for risks from commodity forwards and higher
+expenditure for legal and litigation risks.
+At €7.0 billion, distribution, general and administrative
+expenses were down €0.3 billion on the prior-year figure.
+Sales revenue increased by 5.0% year-on-year to €70.9 bil-
+lion in the reporting year. Sales generated abroad accounted
+for a share of €42.3 billion or 59.6%. Cost of sales increased
+faster than sales revenue, rising by 6.3% to €67.4 billion,
+mainly because of higher commodity prices for vehicles.
+Gross profit on sales fell accordingly to €3.5 (4.1) billion.
+Additional special items in connection with the diesel issue
+were recognized in 2021 and amounted to €0.7 billion. These
+particularly related to further provisions for legal risks. Special
+items had an impact of €-0.7 (-0.8) billion on net other oper-
+ating result.
+ANNUAL RESULT
+133
+Volkswagen AG
+Effects of the Covid-19 pandemic and the limited vehicle availability due
+to the semiconductor shortage hit Volkswagen AG's unit sales in 2021.
+€ million
+Fixed assets
+136,892
+130,377
+9,787
+8,545
+Financial result¹
+39,549
+41,172
+Equity
+398
+66
+Net other operating result
+184,488
+186,336
+Total assets
+-7,269
+-6,973
+expenses
+8,803
+10,168
+Cash-in-hand and bank balances
+Distribution, general and administrative
+38,766
+32,355
+Receivables¹
+6,542
+6,921
+Inventories
+17
+(Condensed, in accordance with the German Commercial Code)
+Strategic stakeholder management
+Management and coordination
+2021
+Dividend payout on subscribed capital
+(€1,283 million)
+3,772,086,799.20
+2,213,173,635.00
+1,558,913,164.20
+Appropriation to other revenue reserves
+Balance (carried forward to new account)
+Net retained profits
+15,328,896,181.40
+19,100,982,980.60
+EMPLOYEE PAY AND BENEFITS AT VOLKSWAGEN AG
+€ million
+Direct pay including cash benefits
+Social security contributions
+preferred shares
+Compensated absence
+Total expense
+2021
+%
+2020
+%
+7,816
+67.5
+7,477
+70.6
+1,340
+11.6
+Retirement benefits
+of which on: ordinary shares
+€
+PROPOSAL ON THE APPROPRIATION OF NET PROFIT
+1 Including write-downs of financial assets.
+4,028
+19,101
+Net retained profits
+-3,165
+13,450
+revenue reserves
+1 Including prepaid expenses.
+Release of/appropriation to
+855
+Group Management Report
+NET ASSETS AND FINANCIAL POSITION
+Total assets amounted to €186.3 billion on December 31,
+2021, up €1.8 billion on the comparative 2020 figure. Prop-
+erty, plant and equipment was up by €0.4 billion, with capital
+expenditure exceeding depreciation charges. The rise in
+financial assets to €127.6 (121.6) billion was primarily attri-
+butable to the reinvestment of the dividend distributed for
+fiscal year 2020 in the capital reserves of VW Finance Luxem-
+burg S.A. in an amount of €3.2 billion as well as a number of
+capital increases at affiliated companies.
+Fixed assets accounted for a share of 73.5 (70.7)% of total
+assets.
+Current assets (including prepaid expenses) amounted to
+€49.4 (54.1) billion on December 31, 2021. Inventories went
+up due primarily to the addition of precious metals. Receiv-
+ables decreased, mainly due to the repayment of loans to
+subsidiaries. Cash instruments increased, driven particularly
+by raising restricted short-term time deposits.
+Equity at the end of the reporting year was €41.2 billion;
+the increase was primarily due to earnings-related factors.
+The equity ratio was 22.1 (21.4)%.
+Other provisions decreased by €0.6 billion to €19.2
+(19.9) billion, due mainly to the reduction in sales-related
+provisions. Provisions for pensions rose by €2.2 billion to
+€21.3 billion, particularly as a result of a change in measure-
+ment inputs, while provisions for taxes increased by €0.5 bil-
+lion to €4.8 billion.
+The €1.9 billion decrease in total liabilities (including
+deferred income) to €99.8 billion was primarily due to reduced
+liabilities to banks and lower liabilities from commercial
+paper.
+Volkswagen AG's cash funds, comprising cash instru-
+ments with a maturity of less than three months, less bank
+liabilities repayable on demand and cash pooling liabilities,
+improved year-on-year from €-5.1 billion to €-2.1 billion.
+The interest-bearing portion of debt amounted to €84.3 (89.8)
+billion. In our assessment, given the context created by the
+extensive and persistent negative impact of the spread of the
+SARS-COV-2 virus and the limited vehicle availability due to
+the semiconductor shortage, the economic position of Volks-
+wagen AG is just as positive overall as that of the Volks-
+wagen Group.
+DIVIDEND POLICY
+Our dividend policy matches our financial strategy. In the
+interests of all stakeholders, we aim for continuous dividend
+growth that allows our shareholders to participate appropri-
+ately in our business success. The proposed dividend there-
+fore reflects our financial management objectives - in partic-
+ular, ensuring a solid financial foundation as part of the
+implementation of our strategy.
+In our Group strategy, we have set ourselves the goal of
+achieving a payout ratio of at least 30%. The payout ratio is
+based on the Group's earnings after tax attributable to Volks-
+wagen AG shareholders. This amounts to 25.4% for the
+reporting period and stood at 29.0% in the previous year.
+DIVIDEND PROPOSAL
+In fiscal year 2021, net retained profits amounted to
+€19.1 billion. The Board of Management and Supervisory
+Board are proposing to pay a total dividend of €3.8 billion, i.e.
+€7.50 per ordinary share and €7.56 per preferred share. In
+addition, a special dividend could be distributed in the event
+that Dr. Ing. h.c. F. Porsche AG goes public.
+1,379
+The Volkswagen Group has established a Group-wide sustain-
+ability management. The related structures, processes and
+responsibilities are codified in a specific Group policy. We
+view sustainability management as a continuous improve-
+ment process. The core elements include assumption of
+overall responsibility for sustainability by the Chair of the
+Board of Management of Volkswagen AG, specification of the
+competence of the responsible Board members for specific
+sustainability management concepts and implementation of
+the Group Sustainability Steering Committee as a top man-
+agement committee. The members of this steering commit-
+tee include managers from central Board of Management and
+from Group Divisin positions as well as representatives of the
+brands and the Group Works Council. The steering com-
+mittee defines concrete strategic goals and programs,
+establishes measures for uniform further development of
+sustainability management across divisions, brands and
+regions and decides on fundamental sustainability issues. It
+also handles the enhancement of Group-wide sustainability
+management. The offices of the Group Sustainability Steering
+Committee are the responsibility of the Group's Sustain-
+ability function.
+13.0
+9.4
+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.
+136
+Sustainable Value Enhancement
+Group Management Report
+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.
+Even in our new Group strategy NEW AUTO – Mobility for generations to come,
+we aim to make mobility sustainable for present and future generations.
+The main financial performance indicators for the Volks-
+wagen Group are described in the "Results of Operations,
+Financial Position and Net Assets" chapter. Nonfinancial key
+performance indicators also provide information on the
+efficiency of our Company's value drivers. These include the
+processes in the areas of research and development, pur-
+chasing, technology, production, marketing and sales,
+information technology and quality assurance. In all of these
+processes, we are aware of our responsibility towards our
+customers, our employees, the environment and society. In
+this chapter we provide examples of how we want to increase
+the value of our Company in a sustainable way.
+SUSTAINABILITY
+Sustainability means maintaining intact environmental,
+social and economic systems with long-term viability at a
+global, regional and local level. The Volkswagen Group can
+influence these systems in various ways, and actively takes
+responsibility to make a contribution to their sustainability.
+We have thus developed a sustainable style of company man-
+agement and put in place the necessary management struc-
+tures.
+We have also anchored our goal to sustainably shape
+mobility for present and future generations in our new Group
+strategy NEW AUTO. Especially the Group's ESG, Decarboni-
+zation and Integrity base initiative will drive this topic
+further.
+"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 AktG were entered
+into, our Company received appropriate consideration for
+each transaction. No transactions with third parties or mea-
+sures were either undertaken or omitted on the instructions
+of or in the interests of Porsche or other affiliated companies
+in the reporting period."
+The materiality process is used to identify and evaluate
+the most important sustainability issues for the Group. The
+decisive factors here are the impact on the environment and
+society, stakeholder expectations, the business model of
+Volkswagen AG and compliance with legal provisions and
+internationally established reporting standards.
+-
+considered both external and internal company perspectives.
+During the development phase of the Group's NEW AUTO
+strategy, financial and capital market requirements were also
+taken into consideration for the selection of focus issues. As a
+result of this process, the four already defined focus areas -
+decarbonization, circular economy, responsibility in supply
+chains and in business, and people & transformation – were
+confirmed from the 2020 materiality analysis. Two new focus
+areas - diversity as well as integrity – were added in 2021, and
+all focus areas were classified as material by the Group
+Sustainability Steering Committee. The associated United
+Nations Sustainable Development Goals (SDGs) including the
+relevant subgoals were assigned to the focus areas in parallel.
+The six focus areas cover most of the requirements formu-
+lated in the ESG ratings for assessment criteria applied. The
+focus areas are each underpinned by explicit goals and
+milestones, measurable KPIs - where available and clear
+responsibilities allocated to the respective Group functions
+and appropriate packages of measures. ESG-related KPIs such
+as the decarbonization index and the diversity index are
+already today reflected in the remuneration of members of
+the Board of Management.
+-
+For more information on sustainability, please see our
+Sustainability Report for fiscal
+year 2021.
+Parameters and guiding principles
+Our actions are determined by the Volkswagen Group
+Essentials as the foundation of values and the basis for our
+shared corporate culture. The Volkswagen Group Essentials
+support managers and employees in overcoming legal and
+ethical challenges that arise in their daily work. At the same
+time, we are guided in our activities by several internal guide-
+lines on sustainability.
+Group Management Report
+Sustainable Value Enhancement
+137
+On this basis, we seek to align the Volkswagen Group's
+actions with international agreements and frameworks such
+as the Sustainable Development Goals (SDGs) of the United
+Nations (UN), the declarations of the International Labour
+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.
+134
+Since 2021, after a five-year hiatus, the Volkswagen Group has
+officially been reinstated as a participant of the UN Global
+Compact, the world's largest corporate sustainability initia-
+tive. The Volkswagen Group formally requested renewed par-
+ticipation in the reporting period and its request was granted.
+We had been removed from the list of members in the wake
+of the diesel issue. An important prerequisite for reinstate-
+ment was met on successful completion of the compliance
+monitorship in 2020.
+We conducted another materiality analysis in the
+reporting period. In reviewing potentially material issues, we
+The Board of Management of Volkswagen AG has submitted
+to the Supervisory Board the report required by section 312
+of the Aktiengesetz (AktG - German Stock Corporation Act)
+and issued the following concluding declaration:
+DEPENDENT COMPANY REPORT
+Risks for Volkswagen AG arising from the use of financial
+instruments are generally the same as those to which the
+Volkswagen Group is exposed. An explanation of these risks
+can be found in the chapter "Report on Risks and Oppor-
+tunities" of this annual report.
+1,099
+10.4
+1,345
+11.6
+634
+6.0
+11,585
+100.0
+10,588
+100.0
+Group Management Report
+Volkswagen AG
+135
+VEHICLE SALES
+Volkswagen AG sold a total of 1,775,556 (1,941,821) vehicles
+in fiscal year 2021. During the reporting period, demand
+recovered from the declines in sales in the prior-year period
+precipitated by the Covid-19 pandemic. However, the limited
+vehicle availability due to the semiconductor shortage had a
+detrimental impact. Vehicles sold abroad accounted for a
+share of 66.3 (64.9)%.
+BUSINESS DEVELOPMENT OF VOLKSWAGEN AG
+As the parent of the Volkswagen Group, Volkswagen AG is
+fundamentally subject to the same expected developments
+and risks and opportunities. The forecast is explained in the
+chapter entitled "Report on Expected Developments" and the
+risks and opportunities in the chapter entitled "Report on
+Risks and Opportunities” of this annual report.
+PRODUCTION
+Volkswagen AG manufactured a total of 631,655 vehicles
+(-20.3%) in the reporting year at its vehicle production plants
+in Wolfsburg, Hanover and Emden. In fiscal year 2021, supply
+shortages, especially for semiconductors, limited production
+and resulted in a further reduction in total annual pro-
+duction volumes, after the pandemic had had a strong impact
+in the previous year.
+EMPLOYEES
+As of December 31, 2021, a total of 117,633 (118,673) people
+were employed at the sites of Volkswagen AG, excluding staff
+employed at subsidiaries. Of this figure, 4,635 (4,848) were
+vocational trainees. 7,235 (6,210) employees were in the
+passive phase of their partial retirement.
+Female employees accounted for 17.9 (17.8)% of the
+workforce. Volkswagen AG employed 7,227 (7,002) part-time
+workers. The percentage of foreign employees was 6.5 (6.4)%.
+In the reporting period, 83.3 (83.1)% of the employees in
+Volkswagen AG's production area were in possession of
+vocational or additional training. The proportion of gradu-
+ates was 21.4 (20.7) % in the same period. The average age of
+employees in fiscal year 2021 was 44.8 (44.5) years.
+RESEARCH AND DEVELOPMENT
+Volkswagen AG's research and development costs as defined
+in the German Commercial Code amounted to €3.5 (3.6) bil-
+lion in the reporting period. 13,507 (+1.4%) people were
+employed in this area at the end of the reporting period.
+RISKS ARISING FROM FINANCIAL INSTRUMENTS
+1,084
+Volkswagen AG
+Volkswagen AG
+10.4%
+33.3
+33.3
+Proportion of debt
+66.7
+66.7
+Proportion of equity
+1.0
+0.9
+Cost of debt after tax
+-0.4
+-0.4
+Tax
+1.3
+Cost of debt
+8.8
+Cost of equity after tax
+(1.16)
+(Volkswagen beta factor)
+1.2
+Volkswagen-specific risk premium
+7.5
+Market risk premium
+0.1
+1.4
+9.3
+6.2
+(1.26)
+Cost of capital after tax
+The analysis period for the beta factor calculation spans five
+years with annual beta figures calculated on a weekly basis
+followed by the subsequent calculation of the average. A beta
+factor of 1.16 (1.26) was determined for 2021.
+4,756
+7,504
+6.5
+6.5
+7,450
+114,907
+11,740
+113,386
+10.4
+6.2
+6,984
+Value contribution
+Cost of invested capital
+Cost of capital in %
+Return on investment (ROI) in %
+Invested capital (average)
+Operating result after tax
+2020
+2021
+€ million
+RETURN ON INVESTMENT (ROI) AND VALUE CONTRIBUTION IN THE AUTOMOTIVE DIVISION¹
+More information on value-based management is
+contained in our publication entitled “Financial Control
+System of the Volkswagen Group", which can be downloaded
+from our Investor Relations website: www.volkswagenag.com/
+en/Investor Relations/news-and-publications/More_Publica-
+tions.html.
+-
+At €6,984 (7,504) million, the opportunity cost of capital
+(invested capital multiplied by cost of capital) was slightly
+below the prior-year figure. After deduction of the
+opportunity cost of invested capital, the operating result after
+tax - which had clearly improved despite still being affected
+by the Covid-19 pandemic and particularly the shortages in
+the supply of semiconductors led to a positive value
+contribution of €4,756 (−54) million.
+The return on investment (ROI) is the return on invested
+capital for a particular period based on the operating result
+after tax. The ROI improved due to the higher operating
+result and, at 10.4 (6.5)%, exceeded our minimum required
+rate of return of 9%.
+At €113,386 (114,907) million, invested capital in the
+reporting year was on a level with the previous year.
+effects. The increase resulted primarily from favorable price
+positioning, positive effects from the fair value measurement
+of derivatives to which hedge accounting is not applied and
+positive mix effects. Negative special items due to the diesel
+issue were lower than in the previous year. Contrary effects
+resulted from factors such as limited vehicle availability due
+to the semiconductor shortage, increased provisioning in the
+reporting year in connection with the EU antitrust
+proceedings against Scania and one-off expenses for
+restructuring measures in the Commercial Vehicles Business
+Area. The effect of purchase price allocation on earnings and
+assets is not taken into account as this cannot be influenced
+by management in the course of business operations.
+At €11,740 (7,450) million, the operating result after tax in
+the Automotive Division, including the proportionate oper-
+ating result of the equity-accounted Chinese joint ventures,
+exceeded the previous year's figure, which had been more
+severely impacted by the Covid-19 pandemic and its negative
+RETURN ON INVESTMENT (ROI) AND VALUE CONTRIBUTION IN
+THE REPORTING PERIOD
+A weighting on the basis of a fixed ratio for the fair values
+of equity and debt gives an effective cost of capital for the
+Automotive Division of 6.2 (6.5)% for 2021.
+The cost of debt is based on the average yield for long-
+term debt. As borrowing costs are tax-deductible, the cost of
+debt is adjusted to account for the tax rate of 30%.
+6.5
+2.0
+7.5
+-0.2
+Group Management Report
+Results of Operations, Financial Position and Net Assets
+130
+Noncurrent assets were 8.6% higher than at the end of
+2020, at €157.9 billion; the property, plant and equipment
+included in this item was down. Lease assets and noncurrent
+financial services receivables were up, driven by business
+growth and changes in exchange rates.
+The Financial Services Division's total assets on December 31,
+2021 were €256.7 billion, exceeding the figure on the 2020
+reporting date by 5.6%, mainly due to exchange rate effects.
+Financial Services Division balance sheet structure
+At the end of 2021, the Automotive Division's total assets
+stood at €271.9 billion, an increase of 7.0% compared with
+December 31, 2020.
+Current other liabilities exceeded the figure as of Decem-
+ber 31, 2020; the other financial liabilities included in this
+item increased, due among other things to the effects of the
+measurement of derivatives and to higher liabilities from
+buyback transactions. Other current provisions rose because,
+among other reasons, provisions in connection with the EU
+antitrust proceedings against Scania had to be increased to
+€0.9 billion in the reporting period.
+At €63.9 (63.8) billion, current liabilities were on a level with
+the previous year. Current financial liabilities amounted to
+€-10.2 (-2.8) billion due primarily to reclassifications from
+noncurrent to current liabilities. The figures for the Auto-
+motive Division also contain the elimination of intragroup
+transactions between the Automotive and Financial Services
+divisions. As the current financial liabilities for the primary
+Automotive Division were lower than the loans granted to the
+Financial Services Division, a negative amount was disclosed
+in both periods. Trade payables were up distinctly, by 7.4%,
+compared with the end of 2020.
+Noncurrent liabilities increased by €5.4 billion to €98.9 bil-
+lion. The noncurrent financial liabilities included here were
+driven up by exchange rate effects, among other factors. Pen-
+sion provisions were lower than the comparative 2020 figure,
+due mainly to the actuarial remeasurement following a
+change in the discount rate.
+Equity in the Automotive Division amounted to
+€109.0 billion at the end of the reporting period, up 12.7%
+from December 31, 2020. Good earnings performance, lower
+actuarial losses from the remeasurement of pension plans and
+positive currency translation effects pushed equity higher,
+while the dividend paid to the shareholders of Volks-
+wagen AG, negative effects from the measurement of deriva-
+tives recognized directly in equity, and the redemption of the
+hybrid note called in the first quarter of 2021 weighed on this
+item. Noncontrolling interests are primarily held by the
+noncontrolling interest shareholders of the TRATON GROUP.
+The equity ratio was 40.1 (38.1)%.
+The "Assets held for sale" item consists mainly of the
+carrying amounts of the assets of SITECH intended for dere-
+cognition. The “Liabilities held for sale" item comprises the
+carrying amount of the corresponding liabilities intended for
+derecognition.
+The Automotive Division's cash and cash equivalents
+grew by €1.3 billion to €25.5 billion.
+Current assets expanded by €4.3 billion compared with
+the figure at the end of 2020, to €101.5 billion. The inven-
+tories included in this item were driven higher, primarily by
+exchange rate effects. Current other receivables and financial
+assets increased.
+the previous year. Due to the rise attributable to capital
+increases and the investment in Gotion High-Tech among
+other factors, equity-accounted investments were up sub-
+stantially in the fiscal year under review, despite dividend
+resolutions. In total, noncurrent assets increased to
+€170.4 (156.9) billion.
+100
+90
+80
+70
+60
+60
+Current liabilites
+31.1 (33.3)
+Current assets
+37.9 (39.2)
+Group Management Report
+129
+At €98.8 (97.7) billion, current assets were virtually on a level
+with the previous year's reporting date. Current other receiv-
+ables and financial assets, inventories and current financial
+services receivables ended the year lower, while total securi-
+ties and cash and cash equivalents in the Financial Services
+Division amounted to €19.1 billion, thus exceeded the figure
+at the end of 2020 by €5.7 billion.
+At the balance sheet date, the Financial Services Division
+accounted for around 48.6 (48.9) % of the Volkswagen Group's
+assets.
+On December 31, 2021, the Financial Services Division's
+equity stood at €37.1 billion, 15.9% more than a year earlier,
+driven by earnings and exchange rate effects. The equity ratio
+was 14.5 (13.2)%.
+2020
+Risk-free rate
+%
+COST OF CAPITAL AFTER TAX IN THE AUTOMOTIVE DIVISION
+131
+Results of Operations, Financial Position and Net Assets
+Group Management Report
+1 The value contribution corresponds to the Economic Value Added (EVA). EVAⓇ® is a
+registered trademark of the consulting firm Stern Stewart & Co.
+The specific business risk – price fluctuations in Volks-
+wagen preferred shares is modeled in comparison to the
+MSCI World Index when calculating the beta factor. The MSCI
+World Index is a global capital market benchmark for
+investors.
+-
+The general risk premium of 7.5% reflects the general risk
+of a capital investment in the equity market.
+This model uses the yield on long-term risk-free Bunds,
+increased by the risk premium attaching to investments in
+the equity market. The risk premium comprises a general
+market risk and a specific business risk.
+-54
+The cost of equity is determined using the Capital Asset
+Pricing Model (CAPM).
+Determining the current cost of capital
+As the concept of value-based management only com-
+prises our operating activities, assets relating to investments
+in subsidiaries and associates and the investment of cash
+funds are not included when calculating invested capital.
+Interest charged on these assets is reported in the financial
+result.
+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
+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.
+Based on our companies' income tax rates, which vary from
+country to country, we assume an overall average tax rate of
+30% when calculating the operating result after tax.
+The operating result shows the economic performance of
+the Automotive Division and is initially a pre-tax figure.
+Value contribution¹ is calculated on the basis of the operating
+result after tax and the opportunity cost of invested capital.
+Components of value contribution
+The return on investment serves as a consistent target in
+strategic and operational management. 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. The concept of value-based management
+allows the success of the Automotive Division and individual
+business units to be evaluated. It also enables the earning
+power of our products, product lines and projects - such as
+new plants- to be measured.
+mance measure.
+RETURN ON INVESTMENT (ROI) AND VALUE CONTRIBUTION
+The central focus of the Volkswagen Group's financial target
+system is continuously and sustainably increasing the value
+of the Company. In order to make efficient use of resources in
+the Automotive Division and to measure the success of this,
+we have been using a value-based management system for a
+number of years, with return on investment (ROI) as a rela-
+tive indicator and value contribution¹, a key performance
+indicator linked to the cost of capital, as an absolute perfor-
+Deposits from the direct banking business amounted to
+€26.7 (28.9) billion, down from the figure recorded a year
+earlier.
+Noncurrent liabilities increased by 8.9% overall, mainly
+because of a rise in noncurrent financial liabilities to refi-
+nance the business volume and higher noncurrent other
+liabilities. Overall, current liabilities were in a similar range as
+in the previous year. A reduction in current financial liabili-
+ties was offset mainly by higher current other liabilities.
+The cost of capital is the weighted average of the required
+rates of return on equity and debt.
+1 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.
+2021
+Results of Operations, Financial Position and Net Assets
+Sales revenue
+Power Engineering Business Area
+€-79 million
+Operating result
+-0.4%
+Operating return on sales
+considerable increase
+€22.2 billion
+Sales revenue
+Commercial Vehicles Business Area
+7.5%
+€13.8 billion
+€13.1 billion
+in forecast range
+in forecast range
+in forecast range
+in forecast range
+€7.2 billion
+Operating result
+€8.2 billion
+Operating result before special items
+8.0%
+6.0-8.0%
+6.0-8.0%
+5.0-6.5%
+5.0-6.5%
+5.2%
+4.6%
+Operating return on sales
+€172.9 billion
+considerable increase
+significant increase
+Operating result
+€156.3 billion
+€-482 million
+Sales revenue
+moderately over 9%
+noticeably over 9%
+132
+6.5%
+Return on investment (ROI) in the
+Automotive Division
+5.1%
+€8.6 billion
+€26.7 billion
+7.6%
+noticeable increase
+very strong increase
+~ 7.0%
+~ 5.0%
+noticeable increase
+distinct decrease
+€44.0 billion
+€6.0 billion
+€3.3 billion
+€45 million
+€30.1 billion
+0.4%
+€134 million
+noticeable decrease
+at the break even point
+very strong increase
+~ 1.5%
+in forecast range
+noticeable decrease
+at the break even point
+in forecast range
+4.0-5.5%
+noticeable increase
+around the prior-year level
+~ 7.0%
+~ 6.0%
+around the prior-year level
+moderate increase
+€6.4 billion
+€26.8 billion
+Net liquidity in the Automotive Division
+7.6%
+6.1%
+€40.8 billion
+€3.0 billion
+Net cash flow in the Automotive Division
+Capex/sales revenue in the Automotive Division
+R&D ratio in the Automotive Division
+Operating result
+Financial Services Division
+Operating return on sales before special items
+€3.6 billion
+€20.0 billion
+€19.3 billion
+20
+30
+40
+50
+Results of Operations, Financial Position and Net Assets
+considerable increase
+9.3 million
+Sales revenue
+Volkswagen Group
+Deliveries to customers (units)
+Actual 2021
+Adjusted Forecast
+for 2021
+Original Forecast
+for 2021
+Actual 2020
+FORECAST VERSUS ACTUAL FIGURES
+Return on investment (ROI) in the Automotive Division
+improved to 10.4% and was therefore, as anticipated, above
+our minimum required rate of return on invested capital.
+The reduction in capital expenditure meant that the
+Automotive Division reached the forecast ratio of capex to
+sales revenue of 5.1%. Net cash flow amounted to €8.6 billion;
+mainly for earnings-related reasons, this was, as expected,
+noticeably up on the previous year despite higher cash out-
+flows for M&A activities. Including the acquisition of Navistar,
+net liquidity stood at €26.7 billion at the end of fiscal year 2021
+and was therefore better than recently estimated.
+Research and development costs reflect our activities under-
+taken to safeguard the Company's future viability; the R&D
+ratio in the Automotive Division was higher than expected, at
+7.6%, because of a rise in research and development costs and
+lower sales revenue.
+The Volkswagen Group's business was impacted by the
+effects of the Covid-19 pandemic and in particular by the
+limited vehicle availability as a result of the semiconductor
+shortage throughout the entire reporting period, and this led
+to deviations from the original forecast. Moreover, our indus-
+try is affected by fierce competition, technological change
+and growing environmental awareness. In this environment,
+we delivered 8.9 million vehicles to customers. The Group's
+sales revenue was up 12.3%, mainly due to mix effects and as
+a result of the improved financial services business. The oper-
+ating result before special items went up to €20.0 billion. The
+operating return on sales before and after special items was
+8.0% and 7.7% respectively, putting it above the forecast range.
+Sales revenue
+The Board of Management of Volkswagen AG considers busi-
+ness development and the economic position to be satis-
+factory overall in the context of the current challenges.
+Group Management Report
+SUMMARY OF BUSINESS DEVELOPMENT AND
+ECONOMIC POSITION
+10
+0
+around the prior-year level
+62.1 (60.8)
+in forecast range
+in forecast range
+in forecast range
+in forecast range
+€9.7 billion
+Noncurrent liabilities
+41.3 (40.8)
+8.0%
+7.7%
+6.0-7.5%
+6.0-7.5%
+€250.2 billion
+considerable increase
+5.0-6.5%
+5.0-6.5%
+significant increase
+4.8%
+4.3%
+Passenger Cars Business Area
+Operating result
+Operating result before special items
+Operating return on sales
+€10.6 billion
+€222.9 billion
+Operating return on sales before special items
+Noncurrent assets
+Equity
+27.6 (25.9)
+Total assets
+in percent
+8.9 million
+Total equity
+and liabilities
+120
+2022.
+143
+140
+We are currently intensively preparing for the German Supply
+Chain Due Diligence Act. The Volkswagen Group supports the
+newly created binding legal framework under which com-
+panies and their suppliers commit to respecting human
+rights. We welcome the fact that the law creates longer-term
+legal certainty for companies. Yet the LkSG will also impose
+requirements that can only be fulfilled with great effort on
+the part of companies.
+results were reviewed and confirmed by the companies,
+which were then notified of risk-specific measures that they
+were required to implement by the end of the reporting
+period. The implementation will be monitored starting in
+For more information on integrity and compliance as well as
+the topic of business and human rights, please see our 2021
+Group Sustainability Report.
+iWHISTLEBLOWER SYSTEM
+https://www.volkswagenag.com/en/group/compliance-and-risk-management/
+The topic of business and human rights is closely integrated
+into our internal compliance risk assessments. Group Com-
+pliance has now assessed the human rights risks at 782
+controlled Group companies in a total of 83 countries. The
+Transparency through risk assessments
+whistleblowersystem.html
+Phone: +49 5361 9 46300
+E-mail: io@volkswagen.de
+Preparations for the Lieferkettensorgfaltspflichtengesetz (LkSG - German
+Supply Chain Due Diligence Act)
+144
+2020
+CO2 EMISSIONS OF THE VOLKSWAGEN GROUP'S EUROPEAN (EU27+2) NEW PASSENGER CAR FLEET
+in grams per kilometer (WLTP)
+2021'
+2019
+2018
+2017
+0
+20
+100
+Group Management Report
+80
+60
+40
+We are the only automobile manufacturer involved in the
+international, cross-sectoral Global Business Initiative for
+Business and Human Rights (GBI). In addition, we are active
+in Econsense, the sustainability association for German
+industry. Furthermore, we are in dialogue within the German
+automotive industry as part of the National Action Plan for
+Business and Human Rights and seek close exchange with
+other companies as well as institutional investors and invest-
+ment banks, for example at our annual ESG conference for
+investors.
+Sustainable Value Enhancement
+We communicate with our workforce on the topic of business
+and human rights via various channels. We communicate our
+positioning to the public and external stakeholders in inter-
+views and media reports.
+The Group also conducted its first-ever integrity and
+compliance survey in the reporting period, with 47,000
+employees taking part anonymously.
+In 2019, the Volkswagen Group Board of Management estab-
+lished a coordination function for the topic of business and
+human rights within the Volkswagen Group, which also
+coordinates the collaboration with the brands and regions.
+We use an appropriate committee structure to manage this
+topic from the Group Board of Management down to the
+regional level in the Group brands.
+This is based on an evaluation of the answers to three
+questions in the opinion survey that address compliance
+with regulations and processes, dealing with risks and
+errors and the opportunity to act with integrity. In the
+event of negative deviations, the affected departments
+develop and implement measures. From an already good
+basis – the level of agreement among employees has always
+been in the highest category of the underlying five-level
+range – the indicator has continuously improved up to and
+including 2021. The index was up by 4.1 points compared
+with the baseline value and 0.2 points year-on-year.
+160
+Compliance, a culture of error management and behaving
+with integrity.
+>
+To measure the level of target achievement in relation to
+Integrity and Legal Affairs, we have defined a strategic indi-
+cator for the major brands that manufacture passenger cars:
+team.
+The annual opinion survey also provides information
+about the development stage of our culture of integrity. The
+Group-wide employee survey examines whether each
+individual is able to act with integrity. Where a fixed thres-
+hold value is not achieved, the relevant manager must
+identify and remove the possible obstacles together with the
+-
+In addition, Volkswagen uses the integrity index. It measures
+a company's integrity holistically and functions as a struc-
+tural early warning system. Determination of the index began
+in 2019 as a pilot project for the Volkswagen Passenger Cars
+and Audi brands. Independent business ethicists collect more
+than 100 measuring points in the categories of compliance &
+infrastructure, working atmosphere & integrity culture, prod-
+ucts & customers, society, and partners & markets. The assess-
+ment conducted in the reporting period showed encouraging
+progress in the index value. Gains in, among other things, the
+categories of compliance & infrastructure, working atmo-
+sphere & integrity culture, products & customers, and society
+contributed.
+142
+Sustainable Value Enhancement
+Group Management Report
+Compliance: clear rules in the Group
+Compliance with the rules must be a matter of course for all
+employees of the Volkswagen Group. The Group compliance
+organization provides support worldwide in the form of
+programs, guidelines, processes and practical advice. It helps
+the Group and brand companies to comply with the rules
+when carrying out their business activities and to comply
+with the relevant laws and internal regulations. The com-
+pliance work focuses on the prevention of corruption and
+fraudulent breaches of trust, money laundering and the topic
+of business and human rights.
+The Compliance Infopoint has established itself as the
+central help center for compliance questions at the Volks-
+wagen Group. The team either directly issues a recom-
+mendation on the matter in question or forwards the query
+to a competent body. Case studies derived from these con-
+sultations are regularly incorporated into communications
+about compliance. The accessibility of the Infopoint was
+expanded further in the reporting period; using the Volks-
+wagen 360° app, employees can now contact the Compliance
+Infopoint directly. This makes it much easier particularly for
+employees without a computer workstation of their own.
+-
+In addition, the Group Compliance organization offers
+training and communication formats tailored to specific
+target groups management discussions and training
+courses for multipliers being two of these. Moreover, com-
+pliance content is part and parcel of all career development
+paths from the induction program for trainees to programs
+for leadership and management development to the senior
+management program. The measures are supplemented by
+information and communication activities such as awareness
+campaigns, film and dialogue formats, newsletters and
+interactive games for learning about laws and rules.
+In the reporting period, the Group Compliance organi-
+zation dedicated itself to important future areas with a set of
+actions, including projects for cross-Group collaboration in
+the markets, further development of IT-based compliance
+tools and exchange formats with internal and external
+compliance experts.
+Responsibility in supply chains and in business
+Requirements and aim
+The Volkswagen Group aims to make mobility sustainable for
+generations to come. It is therefore only natural that we
+comply with our legal, social and environmental responsi-
+bility not just within the Group but also in our supply chains.
+This is the reason Volkswagen defined “responsibility in
+supply chains and in business" as a focus topic and integrated
+it into the initiatives of the new Group strategy NEW AUTO.
+We recognize our corporate responsibility for human rights
+in our business units, at our sites and in our business
+relationships. We condemn forced and child labor, respect the
+freedom of assembly, put tolerance and diversity into prac-
+tice, protect the disadvantaged and do not engage in unlawful
+activities. This is also anchored in our Code of Conduct.
+Our goal is to strengthen the compliance management
+system for human rights, which is in force throughout the
+Group. This system has been designed to comply with the
+UN's Human Rights Due Diligence requirements. We aim to
+effectively reduce ESG (environmental, social, governance)
+risks including human rights risks by no later than 2025. All
+Group companies within the scope of Group Compliance are
+to have implemented the topic of business and human rights
+in their compliance management system by 2023. We will
+support the achievement of targets with suitable measures
+and manage this by means of corresponding KPIs.
+Focal points: business and human rights
+We compared the pertinent human rights frameworks with
+our business-specific activities and defined the aspects that
+are relevant for us as focal points. These salient
+business & human rights issues refer to:
+> Labor rights
+> Safety
+> Tolerance
+Group Management Report
+Sustainable Value Enhancement
+Dialogue and cooperation
+119
+Leveraging synergies increases efficiency
+124
+2
+144
+158
+155
+markets, the Volkswagen Group fleets fell just short of the
+statutory requirements for the 2021 reporting period. In
+the United States, the emission pool – comprising the Group
+brands Volkswagen Passenger Cars, Audi, Lamborghini,
+Bentley, Porsche and Bugatti – commits to the Green House
+Gas (GHG) and Corporate Average Fuel Economy (CAFE)
+regulations with which all manufacturers are required to
+comply in connection with passenger cars and light
+commercial vehicles, taking into account credits for air
+conditioning and off cycle credits. Due to the delay in the
+confirmation by the authorities of model years differing
+from the calendar year, internal calculations are used to
+determine the figures for the current and preceding model
+year. The average GHG CO2 value (internal data as of
+September 2021) for the passenger car and light commer-
+cial vehicle fleets in model year 2021 is 147 g CO2/km
+(model year 2020: 151 g CO2/km). The statutory target is
+142 g CO2/km (model year 2020: 139 g CO2/km). Appli-
+cation of the statutory flexibility offered by GHG and CAFE
+together with externally acquired credits enabled the
+Volkswagen Group to comply with the applicable require-
+ments for model year 2021 subject to confirmation by the
+authorities. The figure given for model year 2020 is subject
+to confirmation by EPA and CARB. For 2025, we anticipate a
+CO₂ target in the USA of approximately 110 g CO2/km and
+expect to meet this target. For 2030, we will increase the
+share of electric vehicles in our new vehicle fleet to sig-
+nificantly more than 40%, putting us within the target
+range of the current administration.
+Fuel and drivetrain strategy
+With a view to the legal regulations on emissions, we are
+currently developing a forward-looking vehicle and drivetrain
+portfolio: we have set ourselves the objective of increasing
+drive system efficiency with each new model generation
+- irrespective of whether it is a combustion engine, a hybrid
+or a purely electric drive system. The Volkswagen Group
+closely coordinates technology and product planning with its
+brands so as to avoid breaches of fleet fuel consumption
+limits. These would entail substantial excess emissions pre-
+miums. Around one in five new Volkswagen Group vehicles
+worldwide is therefore to have a purely electric drive by the
+year 2025; depending on market development, this could be
+over two million electric vehicles a year. As part of our elec-
+trification campaign, we aim to offer our customers
+worldwide around 70 fully battery-electric vehicles by 2030;
+production of approximately 20 of these models has already
+started. In addition, a total of around 60 hybrid models are
+planned by the end of the decade, just over half of which are
+already in production. By 2030, the Volkswagen Group aims
+to have electrified its entire model portfolio, from high-
+volume models to premium vehicles. This will mean offering
+at least one electric version - battery electric or hybrid vehi-
+cles - of each of our passenger car models across all Group
+brands. To this end, in addition to the Modular Electric Drive
+Toolkit (MEB), we have also developed an all-electric platform
+for our premium and sports brands - the Premium Platform
+Electric (PPE). Furthermore, we are currently concentrating
+our energies on designing the Scalable Systems Platform
+(SSP), the successor platform for our future all-electric vehi-
+cles, in the Mechatronics technology initiative within the
+Group's new strategy NEW AUTO. The strategic goals of this
+SSP platform are to further reduce variance by consistently
+leveraging synergies and thus tapping into considerable
+potential for cost savings. Audi's Artemis vehicle project will
+use key SSP modules for the first time from 2025. As of
+146
+Sustainable Value Enhancement
+Group Management Report
+2026, Volkswagen will then launch its first model based on
+the SSP in the volume segment in the shape of the Trinity
+vehicle project.
+To offer sustainable, affordable mobility in the future for
+as many people around the world as possible, we offer a range
+of drivetrains with a focus on electrification. From today's
+perspective, conventional combustion engines will continue
+to make up a large share of the drive portfolio in the coming
+years. In the interest of using resources responsibly, it is
+therefore essential to further enhance this engine segment
+and systematically consolidate it for specific markets. Power-
+train measures such as significantly more sophisticated
+exhaust gas purification or mild hybridization of our vehi-
+cles, as well as vehicle measures such as optimized aero-
+dynamics or reduced rolling resistance will be necessary to
+fulfill future emissions standards. We are preparing inten-
+sively for this as we develop our product portfolio.
+It is more important to us than ever to rigorously pursue
+our modular approach. We are reducing the number of
+individual modules so that we can make a large product
+portfolio economically viable. For example, we aim to reduce
+the number of versions of conventional combustion engines
+in the Group in the long term as part of our transformation.
+This will create capacity for the development and production
+of new hybrid and electric drives.
+Life cycle engineering and recycling
+Technological innovation for reducing fuel consumption is
+not enough on its own to minimize the effect of vehicles on
+the environment. We consider the environmental impact
+caused by our products throughout the entire vehicle life
+cycle and at all stages of the value chain. This includes the
+manufacturing process with the associated extraction of raw
+materials, the production of materials, the processes at our
+suppliers and our own production operations at our sites, the
+use phase with the resulting vehicle emissions and the
+necessary supply of fuel and charging current, and ultimately
+the recycling of the vehicle at the end of its life cycle. We
+identify the stages of the life cycle at which improvements
+will have the greatest effect and develop appropriate
+solutions. We call this life cycle engineering. Recycling, for
+example, is an important means of reducing environmental
+impact and conserving resources. We therefore already take
+the recyclability of the required materials into consideration
+when developing new vehicles, use high-quality recycled
+material and avoid pollutants. One of the recommendations
+for achieving this goal is avoiding substances on the EU
+REACH Candidate List of Substances of Very High Concern.
+Under the European Directive on end-of-life vehicles, pas-
+senger cars and light commercial vehicles must be 85%
+recyclable and 95% recoverable. Our vehicles registered in
+Europe comply with these standards.
+When developing vehicles, we cooperate closely with our
+brands to leverage synergies. The joint strategy of our devel-
+opment alliance involves, for example, making the Group
+more competitive and viable in the long term by deploying
+resources more effectively and efficiently in the research and
+development of new mobility-related technologies, products
+and services. In our Group-wide development alliance, the
+brands therefore not only work with each other, but also for
+each other on key technologies, forming cross-brand net-
+works of expertise to address topics of importance for the
+future. Against this background, responsibilities in the
+Development division were reorganized in 2020 in order to
+coordinate module development even more efficiently and
+leverage synergies in module variance, components, parts
+and processes.
+We also manage our modules centrally to reduce costs,
+capital expenditure and complexity. We are seeking to reduce
+expenditure in the modular toolkits, while at the same time
+facilitating widespread electrification and a focus on auton-
+omous systems. We wish to achieve this through a con-
+siderable reduction in complexity using streamlined plat-
+forms that synergize but do not overlap. To this end, the
+individual Group brands draw on the modular toolkits, thus
+creating synergies between the various models of a product
+line, as well as across the product lines. By streamlining the
+toolkits, we are giving ourselves the financial leeway needed
+for developments in the future trends of digitalization and
+autonomous driving. The high-volume passenger car brands
+have introduced an organizational structure based on
+product lines, thus strengthening their responsibility for the
+success of vehicle projects, improving project work across the
+divisions, accelerating decision-making and intensifying the
+focus on project results.
+We are also leveraging synergies by constantly sharing
+best practices, for instance in virtual development and
+testing. Last but not least, the centralized development and
+consolidation of our IT systems is also helping to strengthen
+cooperation across the brands, make development activities
+more comparable and reduce the Group's IT costs.
+Sustainable mobility, connectivity and automated driving
+The mobility of people and goods is a prerequisite for econ-
+omic growth and social development. But natural resources
+are dwindling and climate change is advancing. This calls for
+Group Management Report
+Sustainable Value Enhancement
+Methods for monitoring effectiveness and measuring
+progress are an integral part of the compliance management
+system. The central planning and reporting system of the T4I
+program provides continuous transparency on the imple-
+mentation status of the key initiatives. It is used for internal
+reporting to the Group Board of Management and the Brand
+Board of Management, makes project advances known and
+serves to provide assistance when countermeasures are being
+introduced in response to project delays.
+Developers from CARIAD work at plants in Germany and
+collaborate with development teams in North America and
+China. The establishment of separate CARIAD branches in
+North America and China was initiated in 2021. The company
+employs around 4,500 specialists who are developing the
+following solutions in the Group:
+New software solutions are the basis for this. This is why
+the Volkswagen Group has declared software development to
+be one of its targeted core competencies by introducing the
+software key initiative to its new strategy NEW AUTO. This
+initiative is the responsibility of our software subsidiary
+CARIAD. Founded in 2020 as the Car.Software Organisation
+and renamed CARIAD in 2021, the company is to develop a
+sustainable, convenient, connected, safe automotive experi-
+ence for the customers of our Group brands. CARIAD provides
+answers to the strategic aspects of digitalization and pools
+the Group's software expertise.
+We are researching and developing such concepts in our
+Group-wide alliance: when shaping the future of mobility, we
+are looking not only at the automobile and related services,
+but at all modes of transport, transport infrastructures and
+people's mobility habits. Digital connectivity and automated
+driving allow for completely new approaches to solving
+problems. They can help us play our part in a comprehensive
+mobility system for the future and drive forward our indus-
+try's transformation.
+comprehensive mobility concepts to minimize the environ-
+mental impact. Such solutions need to be efficient, sustain-
+able, crisis-proof, customer-oriented and accessible anytime
+and anywhere.
+147
+151²
+100²
+147'
+160
+123
+122
+1 The European Commission switched its calculation of CO2 fleet emissions from NEDC to WLTP in 2021.
+2 Subject to confirmation of CO2 data within the scope of official publication by the European Commission.
+RESEARCH AND DEVELOPMENT
+Forward-looking mobility solutions with brand-defining
+products and services would be unthinkable without inno-
+vation. This makes our research and development work
+essential for sustainably increasing the value of the Company.
+Together with our Group brands, we have launched mea-
+sures based on our NEW AUTO strategy to link development
+activities across the Group. At the heart of this new strategy is
+an efficient, cross-brand development alliance characterized
+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 synergies
+across the Group and act as a role model for the environment,
+safety and integrity. The development alliance plays a major
+part in driving the Volkswagen Group's transformation and
+helping to make it fit for the future.
+In view of this strategic focus, we concentrated in the
+reporting period on continuing to develop forward-looking
+mobility solutions, establishing technological expertise to
+strengthen our competitiveness, expanding our range of prod-
+ucts and services and improving the functionality, quality,
+safety and environmental compatibility of our products and
+services.
+CO2 fleet emissions
+We use a strategic indicator in Europe and the United States
+to evaluate the effectiveness of our measures to reduce CO2
+emissions when driving:
+> CO2 fleet emissions. The Volkswagen Group's new passen-
+ger car fleet in the EU (excluding Lamborghini and Bentley)
+(EU27+2) emitted an average of 119 g CO2/km (WLTP)¹ in
+the reporting period in accordance with the statutory
+measurement bases. The statutory target is 121 g CO2/km
+(WLTP). The Volkswagen Group thus more than met the
+EU's CO2 fleet target. Under European CO2 legislation, the
+Lamborghini and Bentley brands are considered small
+volume manufacturers with an independent fleet and are
+assessed accordingly. Both exceeded their individual
+targets. Bentley and Lamborghini will be integrated into
+the Volkswagen Group's new passenger car fleet in the EU
+from 2022. The European Commission is striving to cut CO2
+emissions by 15% by the year 2025, which corresponds to a
+CO2 target of less than 105 g CO2/km for our new passenger
+car fleet in the EU. A reduction of 55% has been proposed
+for 2030, equivalent to a CO2 target of less than 60 g
+CO2/km. We assume that our new passenger car fleet in the
+EU will meet this target for 2025 and exceed the target for
+2030. The Volkswagen Group's new light commercial
+vehicles fleet in the EU emitted an average of 202 g CO2/km
+(WLTP)¹ in the 2021 reporting period according to the
+statutory measurement bases. The statutory target is
+198 g CO2/km (WLTP)¹. Contrary to the original planning,
+the Group fell just short of this target owing to the
+semiconductor shortage, which resulted in limited vehicle
+availability. The CO2 pool established together with other
+manufacturers achieved its target. All figures are subject to
+confirmation of CO2 data within the scope of official
+publication by the European Commission. The European
+Commission is striving to cut CO2 emissions by 15% by the
+year 2025, which corresponds to a CO₂ target of less than
+175 g CO2/km for our new light commercial vehicles fleet
+in the EU. A reduction of 50% has been proposed for 2030,
+equivalent to a CO2 target of less than 115 g CO2/km. We
+assume that our new light commercial vehicles fleet in the
+EU will meet this target for 2025 and exceed the target for
+2030. In the United Kingdom and Switzerland/Liechtenstein
+Group Management Report
+Sustainable Value Enhancement
+145
+CO2 EMISSIONS IN VOLKSWAGEN GROUP PASSENGER CARS AND LIGHT COMMERCIAL VEHICLES UNDER GHG STANDARDS IN THE USA
+in grams per kilometer for the model year
+2021
+2020
+2019
+2018
+2017
+0
+20
+40
+60
+80
+100
+120
+140
+1 Subject to submission of the final MY report MY21 and subsequent confirmation by EPA and CARB (internal data as of September 2021).
+2 Subject to confirmation by EPA and CARB (final MY report MY20 submitted but not yet confirmed).
+Sustainably measuring success
+wagen
+The Volkswagen Group has a zero-tolerance policy on active
+or passive corruption. This is anchored in both our internal
+Code of Conduct and our Code of Conduct for Business
+Partners. Our investigation offices look into and process any
+reported violations of our principles, and sanctions are
+imposed on the employees concerned. This initiative also
+includes the development and implementation of mandatory
+training for employees in divisions or companies with a high
+risk exposure.
+€ million
+2021
+2020
+Total research and development costs
+15,583
+13,885
+of which capitalized development costs
+7,843
+6,473
+Capitalization ratio in %
+50.3
+46.6
+Amortization of capitalized development costs
+5,050
+4,644
+Research and development costs recognized in profit or loss
+12,790
+12,056
+Sales revenue
+Total research and development costs
+Hence, T4I aims not only to strengthen uniform corporate
+governance throughout the Group in relation to integrity and
+compliance, the program is also designed to advance the
+culture of integrity by inspiring and motivating employees
+and strengthening their own drive to act with integrity in all
+situations. This includes steadfastness in adhering to princi-
+ples of integrity – regardless of economic or social pressures.
+Thus, T41 and the ICMS contribute significantly to increasing
+sustainability in the Volkswagen Group.
+206,237
+182,106
+15,583
+13,885
+7.6
+7.6
+RESEARCH AND DEVELOPMENT COSTS IN THE AUTOMOTIVE DIVISION
+-
+ventures
+As of December 31, 2021, our Research and Development
+departments - including the equity-accounted Chinese joint
+employed 53,046 people (+0.6%) Group-wide,
+corresponding to 7.9% of the total workforce.
+updates - an important prerequisite for fulfilling regulations
+R.155 and R.156 of the United Nations Economic Commission
+for Europe (UNECE).
+The new software platform E³ 2.0 is set to pave the way for
+the autonomous driving functions of the future, with CARIAD
+responsible for developing assisted and highly automated
+driving functions up to Level 4 for all of the Volkswagen
+Group's passenger car brands. Volkswagen is developing
+robotic shuttles and vans as part of its strategic Mobility
+Solutions technology initiative, which is promoting auton-
+omous driving in conjunction with service models, i.e. shared
+mobility (Mobility as a Service, Transportation as a Service).
+The Group brands presented new concept vehicles in
+2021 that showcase their vision of sustainable future mobil-
+ity. These vehicles aim to enable new forms of mobility in
+both cities and rural areas, also addressing user groups that
+have so far been excluded from access to mobility: Volks-
+wagen Commercial Vehicles presented its autonomous
+shuttle for the first time in conjunction with Argo AI. The
+Volkswagen ID.Life will offer sustainable electric mobility for
+urban life, while the Audi Grandsphere defines the future of
+autonomous business travel.
+Pooling strengths with strategic alliances
+The aim of our new strategy NEW AUTO is to transform our
+core business activities and to expand the mobility solutions
+business area at the same time. It is decisive to the success of
+this plan that we place our innovative strength on even
+broader foundations.
+Within the Volkswagen Group, we combine our
+> VW.OS, a uniform vehicle operating system for all Group technological innovation activities in the Volkswagen Group
+vehicles
+> A uniform end-to-end electronics architecture
+> Connectivity with VW.AC, a shared Volkswagen Automotive
+Cloud
+> An infotainment platform with an app store for third-party
+providers
+> Driver assistance systems, autonomous parking functions
+and autonomous driving for private mobility
+> A data marketplace
+> New mobility services and digital business models
+Group Management Report
+It is envisaged that CARIAD will pool these solutions on a
+specially developed, scalable software platform called E³ 2.0
+and make it available to the Group brands from the middle of
+this decade. The intention is to use it for the first time from
+2025 in an Audi brand model as part of the Artemis project.
+From 2026 the software platform will move into the volume
+segment within the scope of Volkswagen's Trinity project.
+Further Group models will follow to generate economies of
+scale and to lower the cost of growing software requirements
+in the vehicle for all brands.
+Innovation unit. At seven locations worldwide in the USA,
+Europe and Asia, employees are working on sustainable solu-
+tions for urban and interurban mobility systems in line with
+our motto "Mobility for generations to come". Technologies
+and activities that are ready for pre-development are regu-
+larly transferred from Volkswagen Group Innovation to our
+Group brands to ensure that the areas of digitalization, sus-
+tainability and e-mobility receive continuous support in
+innovative projects. In this way, we are creating an agile
+innovation structure that allows us to initiate new milestone
+projects with innovative international partners, even at short
+notice.
+Growth in the mobility sector is strongly defined through
+regional innovation activities. Volkswagen therefore con-
+centrates its strategic venture-capital activities and partner-
+ships in the Group's international innovation ecosystem. This
+helps us to identify the regional needs of customers more
+precisely, to adjust our product range correspondingly and to
+establish competitive cost structures. In doing so, we rely to a
+greater extent than in the past on partnerships, acquisitions
+and venture-capital investments and manage investment
+selection centrally so as to generate maximum value for the
+Group and its brands. It is against this backdrop that we
+148
+Sustainable Value Enhancement
+Group Management Report
+formed an alliance with Ford Motor Company with the
+intention of working together on vans and mid-sized pickups.
+At the beginning of June 2020, Ford Motor Company and
+Volkswagen AG signed additional contracts within their
+existing global alliance for light commercial vehicles, electri-
+fication and autonomous driving. Among other things, the
+contracts serve as the foundation for a total of three vehicle
+projects. In addition to the existing collaboration on the mid-
+sized pickup, projects are underway for a city van and a one-
+tonne cargo van. In addition, we are investing with Ford in
+Argo AI, a company that is working on the development of a
+system for autonomous driving. This alliance allows both
+companies to integrate Argo Al's self-driving system into
+their own models independently of each other. The system is
+to make fully automated driving possible, and thus to open
+up new opportunities, particularly for ride-sharing providers
+and delivery services in urban areas through the use of fully
+automated vehicles. To this end, we completed a transaction
+to cooperate in the development of autonomous driving with
+Argo AI and Ford at the start of June 2020. As part of this
+transaction, the former Volkswagen Group company AID was
+incorporated into Argo AI. In addition, Ford will use the
+Modular Electric Drive Toolkit (MEB) developed by Volks-
+for a zero-emissions volume model that is expected to
+be offered in Europe from 2023. The aim of the cooperation is
+to place both Volkswagen and Ford in a position that enables
+them to improve their competitiveness, tailor their products
+to better meet the needs of customers worldwide and at the
+same time to leverage synergies related to cost and invest-
+ment.
+We are accelerating our transformation into a mobility
+provider with a fully connected vehicle fleet and our "Volks-
+wagen We" digital ecosystem through our strategic partner-
+ship with Microsoft. Together, we will press ahead with soft-
+ware development for the automobile of tomorrow and new
+services for our customers, including cloud-based driver
+assistance systems and automated driving and parking func-
+tions, thus comprehensively strengthening and expanding
+our IT expertise and solutions.
+We support the design of the framework conditions for
+the approval and introduction of our own self-driving system
+through active involvement in public projects. The experi-
+ence we are gathering here benefits the Group brands and
+thus our customers.
+Key R&D figures
+In fiscal year 2021, we filed 5,638 (6,795) patent applications
+worldwide for employee inventions, the majority of them in
+Germany. The fact that an ever-increasing share of these
+patents is for important cutting-edge fields underscores our
+Company's innovative power. These fields include driver
+assistance systems, automation and connectivity, as well as
+alternative drive systems.
+The Automotive Division's total research and develop-
+ment costs in the reporting period amounted to €15.6 (13.9)
+billion and were 12.2% higher than in the previous year; their
+percentage of the Automotive Division's sales revenue – the
+R&D ratio- remained unchanged at 7.6 (7.6) %. In addition to
+new models, our activities focused above all on the electri-
+fication of our vehicle portfolio, digitalization, new technol-
+ogies and our modular toolkits and platforms. The capitali-
+zation ratio was 50.3 (46.6)%. Research and development
+expenditure recognized in profit or loss in accordance with
+the IFRSS increased to €12.8 (12.1) billion.
+CARIAD is already supplying updatable software to the
+Group brands today. Our goal is to make the software secure
+and traceable. It can be installed in the vehicles as over-the-air
+TOGETHER4INTEGRITY
+R&D ratio
+Integrity and compliance risks are identified,
+4. Risk Management and Internal Controls
+All business activities entail risks. Binding structures and
+processes are designed to help create transparency and
+manage risk. These include the quarterly risk process, which
+is focused on acute risks, the standard internal control system
+(ICS), which is designed to protect key processes, and root
+cause analysis.
+5. Internal Compliance Risk Assessment
+The internal compliance risk assessment (ICRA) identifies and
+addresses compliance risks in the Group, in particular those
+risks involving corruption, money laundering, embezzlement
+and risks relating to business and human rights. Compliance
+measures are defined for each company based on its risk
+profile. The ICRA also defines implementation standards for
+the Code of Conduct, whistleblower system and compliance
+training.
+6. Whistleblower System
+The whistleblower system is the central point of contact for
+reporting cases of rule-breaking by Group employees such as
+white collar crimes, acts of corruption, tax offenses, environ-
+mental offenses, human rights violations, infringements of
+antitrust and competition legislation, money laundering and
+terrorism financing, breaches of product safety and licensing
+regulations, and serious breaches of privacy. Employees and
+third parties can report misconduct at any time and in many
+languages. A wide range of channels is available for this
+purpose, including completely anonymously, if preferred. The
+aim is to avert damage to the Company and its employees
+through the use of binding principles and a clearly governed
+process.
+2
+In the event of planned mergers and acquisitions (M&A
+transactions), the relevant companies are audited for com-
+mercial risks such as corruption, breaches of trust or fraud.
+The analyses provide recommendations to mitigate the risks
+identified. This also applies to joint ventures as well as
+industrialization and cooperation projects with external
+partners. Furthermore, the Group Compliance organization
+works to achieve appropriate compliance management at
+non-controlled shareholdings (NCSs), i.e. companies that are
+not controlled by a Volkswagen Group company as a majority
+shareholder.
+8. Business Partner Due Diligence
+The business partner due diligence (BPDD) process entails
+reviewing the integrity, and especially corruption risks, of
+suppliers, service providers and sales partners. The aim is to
+identify risks of legal infringements, such as corruption or
+the violation of ethical standards, at an early stage, to avoid
+risky business partners and to define measures to minimize
+risks and implement these with the business partner. If this is
+not possible, options for terminating the business relation-
+ship are explored, or the business relationship is not
+established in the first place. As such, we have already
+established the fundamental prerequisites for the imple-
+mentation of parts of the Lieferkettensorgfaltspflichtengesetz
+(German Supply Chain Due Diligence Act).
+REPORTING CHANNELS OF THE WHISTLEBLOWER SYSTEM
+Whistleblower (internal and external)
+The integrity program is designed to reinforce the culture of
+integrity. Its objective is to communicate to employees the
+importance of integrity and motivate employees to behave
+with integrity in their everyday work. We regard integrity as
+an attitude; it provides an inner compass for correct action
+and becomes particularly decisive in gray areas, when explicit
+rules are missing or conflicting goals exist. We place par-
+ticular emphasis on making decisions with integrity. Appro-
+priate training modules on this topic provide support to all
+management levels, from foremen up to executives.
+@>alex
+Plausibility check
+Information on potential
+breaches of regulations
+forward
+Ombudspersons
+External attorneys-at-law
+Group Management Report
+Sustainable Value Enhancement
+141
+9. Product Compliance
+The product compliance management system (PCMS) is
+designed to ensure that our products comply with the legal
+and regulatory requirements of the exporting and importing
+country, internal and external standards, contractually
+agreed customer requirements and externally communicated
+voluntary commitments over their life cycle. We have defined
+clear roles and responsibilities for our PCMS with regard to
+design, implementation and monitoring.
+10. Environmental Compliance
+Statutory environmental regulations and voluntary commit-
+ments are binding at all locations and in all business fields.
+The Group's environmental policy and the environmental
+compliance management system stipulate the relevant
+requirements and responsibilities for all strategy, planning
+and decision-making processes in the Group brands and
+companies. This includes a system of key indicators to
+determine progress in meeting environmental targets in the
+fields of renewable energy, CO2 emissions and resource
+efficiency. We make allowances for the actual and potential
+environmental risks and opportunities across our products'
+entire life cycle.
+11. Anti-Corruption
+Central Clarification Office
+3. Integrity Program
+7. M&A and NCS compliance
+Group Management Report
+owned, managed and mitigated
+4
+We encourage, protect and value the reporting of
+concerns and suspected wrongdoing
+1
+contact persons in cases of doubt. Included in the employ-
+ment contracts, the CoC commits all Group employees to
+comply with it. Our employees undergo regular mandatory
+training in the key contents of the CoC.
+Together4Integrity
+We keep our word
+Sustainable Value Enhancement
+3
+Our leaders at all levels across our organization
+build and sustain a culture of integrity
+5
+We take action and hold ourselves accountable
+when wrongdoing occurs
+HOLISTIC INTEGRITY AND COMPLIANCE MANAGEMENT SYSTEM
+Integrity and compliance are major priorities in the Volks-
+wagen Group. We firmly believe that, for long-term commer-
+cial success, it is important that each and every individual
+complies with laws, regulations and commitments. Com-
+pliant behavior must be a matter of course for all Group
+employees. This is why integrity and compliance remain key
+elements of our new Group strategy NEW AUTO and a focus
+topic in matters of sustainability.
+Our objective is to be a role model and deepen the trust of
+our employees, customers, shareholders and partners in our
+Company. Our regulations, processes and corporate culture
+focus on all employees acting with integrity and complying
+Integrity and compliance are central
+to our business strategy
+At the same time, we have embedded integrity in our
+decision-making processes. For example, every resolution
+proposal submitted to the Board of Management must
+explain that the intended decision is in line with integrity and
+compliance, what risks may be associated with it, and how the
+risks can be reduced. Similar requirements apply to Group
+brands and companies and to Group bodies to which the
+Board of Management has delegated decision-making powers.
+Integrity and compliance must have an equally important
+strategic and operational priority as performance indicators
+in our Company as, for example, sales revenue, profit, prod-
+uct quality or employer attractiveness.
+with the rules at all times.
+Sustainable Value Enhancement
+140
+139
+The Code of Conduct (CoC) is the key instrument for
+reinforcing employees' awareness of responsible action and
+decision making, creating the basis for complying with the
+rules within the Company. The CoC provides support to
+employees and managers, helping them to find the right
+2. Code of Conduct
+The packages of measures are divided into eleven key
+initiatives:
+T41 is to be rolled out in the Volkswagen Group in 2022 and
+implemented by 2025. The Group's headquarters is overseeing
+the program planning and rollout of T4I. The managing
+directors of the individual companies are responsible for
+implementing the program at a local level. The packages of
+measures may differ depending on local circumstances. The
+implementation time will also vary.
+T41 - eleven key initiatives
+Thus, we are not only establishing a worldwide ICMS for
+all Group and brand companies, we are also advancing one of
+the most extensive change and cultural programs in the
+history of the Volkswagen Group.
+Group. This program brings together the vast majority of the
+Group's integrity and compliance activities under one roof,
+applying uniform, robust process and implementation
+standards.
+We are implementing our Together4Integrity (T4I) pro-
+gram to anchor integrity and compliance throughout the
+We have been building a holistic integrity and compliance
+management system (ICMS) since 2018. This system is in line
+with the five internationally recognized ECI (Ethics and Com-
+pliance Initiative) principles: strategy, risk management, a
+culture of integrity, a speak-up environment and resolute
+accountability.
+1. HR (Human Resources) Compliance Policies and Procedures
+The aim of this key initiative is the integration of integrity
+and compliance into the standard HR processes such as
+recruitment, training, promotion and remuneration (bonus
+payments). Integrity and compliance are also a compulsory
+topic in annual employee appraisals and form part of training
+measures for employees across all levels of the Company.
+Sustainable Value Enhancement
+Group Management Report
+motive Cyber Security Management System in keeping with
+the requirements of the UNECE regulation. In this context,
+Volkswagen is implementing comprehensive measures
+across departments in the Group. One of these is a Group-
+wide communications campaign launched for the Volks-
+wagen Passenger Cars brand to underline the importance of
+this issue.
+Strategy of Group Quality
+We review our functional area strategy periodically and
+coordinate it with the brands. We align our activities with our
+goal expressed in the motto: "We embody outstanding
+quality and ensure reliable mobility for our customers
+worldwide." The NEW AUTO Group strategy announced in
+2021 sets new parameters for transforming the Group into a
+software-centric mobility provider. Based on this, our quality
+strategy focuses primarily on achieving maximum levels of
+customer satisfaction throughout the entire customer
+experience – from ordering through to the digital ecosystem
+and up to aftersales and customer service. The work packages
+that are still being implemented will be integrated. Group
+Quality and the brands' quality organizations play an active
+role at all stages of product emergence and testing, making
+an important contribution to successful product launches,
+high customer satisfaction and low warranty and ex gratia
+repair costs.
+Contributing to the Group's strategic indicators
+We use a strategic indicator to measure the contribution of
+Group Quality at the top level of consideration for the major
+passenger car-producing brands.
+> Warranty and ex gratia repair payments per vehicle after 12
+months in service. This indicator shows all warranty and ex
+gratia repair payments for the vehicles produced worldwide
+in each production year, expressed in euros per vehicle. All
+vehicles from the Volkswagen Passenger Cars, Volkswagen
+Commercial Vehicles, ŠKODA, SEAT, Audi and Porsche
+brands are included in this figure. Extraordinary items
+resulting from initiatives such as recalls to assure product
+safety or comply with laws are not taken into account.
+While the figures starting from the 2017 production year
+remained at a constant low level, they increased in the 2020
+production year due to the growing use of new
+technologies in the vehicle and rising complexity. Action
+was taken to reduce these figures.
+Among other things, software development is accompanied
+by quality milestones at all brands, whereby all systems,
+components and parts that directly influence a vehicle's
+safety, type approval and functioning and therefore require
+particular vigilance are safeguarded through multiple-party
+verification. At the series production stage, we are ensuring
+that the conformity checks on our products are carried out
+and assessed with the participation of all business units
+involved. This applies particularly to checks related to
+emissions and fuel consumption.
+The legal and regulatory compliance of our products is
+paramount in our work. In our processes we employ the
+principle of multiple-party verification, which involves
+mutual support and control between the business units.
+We are also dedicating attention to our quality man-
+agement system, reinforcing the interdisciplinary, process-
+driven approach throughout the Group. The quality manage-
+ment system in the Volkswagen Group is based on the ISO
+9001 standard and the official type approval requirements.
+These standards and requirements must be complied 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 sites and brands comply
+with these requirements. 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 implemented and complied with;
+they are coordinated and supported in this endeavor by a
+central office in Group Quality.
+Observing regional requirements
+We use a variety of feedback instruments, such as specific
+customer surveys, to collection information on region-
+specific customer requirements. In addition, we monitor
+relevant internet forums and social media postings
+worldwide to obtain direct customer feedback and identify
+sentiment and trends at an early stage.
+EMPLOYEES
+The Volkswagen Group is one of the world's largest private
+employers. On December 31, 2021, we employed a total of
+Digitalization was once again the beating heart of our
+work in the reporting year: we are sharpening our focus on
+software-based system development, which is a critical factor
+for success in respect of customer satisfaction. Consistent
+application of the “Automotive SPICE" process assessment
+model that we use to improve our processes is particularly
+important in our activities. It is a key building block for
+meeting the requirements of our customers, as well as those
+of the regulatory and legislative bodies.
+Legal and regulatory compliance
+In order to be able to make the perceived quality of our
+vehicles commensurate with that of our competitors, we take
+the needs of our regional customers into account in our
+vehicle audits. Every brand works together with the indi-
+vidual regions to decide how its product is to be positioned
+there. In this way, we strengthen the brands' responsibility. So
+that the vehicle audit returns comparable results, consistent
+quality benchmarks apply across all brands and regions. We
+are continually adapting these to changing requirements. For
+more than 40 years now, we have been deploying auditors
+around the world to assess, from the customer's perspective,
+the vehicles that are ready for delivery and to ensure that
+these vehicles comply with the benchmarks defined.
+Volkswagen has been implementing cybersecurity mea-
+sures in the Group for some time now. For example, we have
+an independent cybersecurity network in place across all
+regions and Group brands and monitor potential cyber risks.
+This enables us to act fast when potential threats arise. The
+UNECE (United Nations Economic Commission for Europe)
+has provided for corresponding certification and homolo-
+gation in the future to ensure that companies can guarantee
+that these aspects are dealt with properly so as to protect the
+users of our vehicles from potential attacks. Our Group
+pursues the goal of implementing standards in the areas of
+both accident prevention and security. We are refining the
+established processes within the framework of an Auto-
+The Volkswagen Group presented its technology roadmap
+for battery and charging until 2030 at its first Power Day in
+March 2021. The objective of the roadmap is to significantly
+reduce the complexity and cost of the battery so as to make
+electric vehicles attractive and affordable for as many people
+as possible. Volkswagen is establishing a European stock
+corporation (Société Européenne) to consolidate activities
+along the value chain for batteries – from processing raw
+materials to developing a unified Volkswagen battery cell to
+managing the European gigafactories. The company's scope
+will also include new business models based around reusing
+discarded car batteries and recycling the valuable raw
+materials they contain. The Group is thus creating efficient
+and future-proof structures for the rapidly growing battery
+business.
+PRODUCTION
+billing). In the current cooperation project with Ford, the
+necessary cross-brand structures and processes have been
+created within the Volkswagen organization so that other
+external customers can also be efficiently served in the
+future.
+Since January 1, 2021, Group-wide responsibility for external
+sales of platforms and components has been combined in the
+new Technology Board position. This effectively concentrates
+the existing activities and resources in one place in the
+Group. The scope of this new Platform Business organi-
+zational unit extends to successful initiation and acquisition
+(including contract design) as well as to support of customer
+projects including the related order processing (logistics,
+Platform Business
+Besides the product lines, the development areas of
+Group Components are combined in the Drivetrain and
+Platform area. The development portfolio focuses on the
+following areas: chassis components, steering systems, drive
+shafts, transmissions, electric drives and thermal manage-
+ment systems in the electric drivetrain. The new Systems and
+Innovation Development department, which was created
+when all components were bundled at organizational level, is
+working on the holistically optimized electric drivetrain
+across all business areas. Close integration of product man-
+agement and development in the Drivetrain and Platform
+area are expected to optimize product costs, further sharpen
+the portfolio of Group Components and play a key role in
+shaping the electric drivetrain of the future.
+The independent corporate entity Volkswagen Group Com-
+ponents, under the umbrella of Volkswagen AG, employs
+around 70 thousand people worldwide. The focus of their
+expertise is the development and manufacture of vehicle
+components. As part of the restructuring of Group Compo-
+nents, the former business unit structure was transferred to
+the Drivetrain and Platform area in a modified form as
+product lines (conventional powertrain, chassis and electric
+drivetrain) with effect from April 1, 2021. The product lines
+assume responsibility for product management and product
+costs across all locations, covering Volkswagen Group Com-
+ponents' conventional portfolio.
+Drivetrain and Platform
+Group Management Report
+Sustainable Value Enhancement
+152
+As part of the Group's strategic alignment, the Charging
+and Energy area is focusing on two key areas. Firstly, sales of
+electric vehicles are being underpinned by the international
+development of a widespread charging infrastructure. As part
+of the joint participation of our Group brands Volkswagen
+Passenger Cars, Audi and Porsche in the pan-European high
+power charging (HPC) joint venture IONITY, an extensive
+charging infrastructure is being developed to safeguard long-
+distance mobility, which already consisted of 1,586 charging
+points at the end of the reporting period. The number of
+public fast charging points in Europe is to be increased to
+18,000 by 2025. At the same time, the charging network in
+North America is to be increased to 10,000 fast charging
+points in collaboration with Electrify America, while the
+charging network in China will be expanded to 17,000 fast
+charging points in conjunction with CAMS. Secondly, sustain-
+able business models are being developed by expanding
+value creation, such as smart and energy market-integrated
+charging.
+Since early 2021, all activities in the Charging and Energy area
+have been combined and managed by the Technology Board
+position, which will thus play a key role in the Group's
+electric mobility strategy in its bid to become the leading
+provider of a smart charging and energy ecosystem.
+Charging and Energy
+In the current business model, overall responsibility for
+all input materials in the battery cell lies with the battery cell
+manufacturers. Volkswagen's involvement in the supply chain
+gives it access to costs and capacity for the materials and raw
+materials needed for battery production, particularly for
+lithium, nickel, manganese and cobalt (vertical integration).
+The objective of intervening in the supply chain is to
+influence costs and capacity so as to maximize the benefit for
+the Company.
+Vertical integration, which is a strategic component of the
+newly created Board position, targets key success criteria of
+the electrification strategy, such as maximizing customer
+benefit, ensuring competitive cost structures and achieving
+transparency in the supply chain to safeguard channels
+critical for supply and crucial to sustainability.
+Although most of the restrictions and measures taken in
+response to the pandemic were lifted during the reporting
+period and factories were able to operate in compliance with
+hygiene protocols and other Covid-19-compliant codes of
+conduct, semiconductor production for key supplier parts
+had a comparatively slow start. Shortages of market capacity
+in the semiconductor industry coupled with brisk demand in
+the consumer goods, IT and telecommunications sectors led
+to supply bottlenecks and consequently restricted our pro-
+duction. The situation was further exacerbated by extra-
+ordinary events such as snowstorms in Texas in early 2021
+and pandemic-related closures of semiconductor plants in
+Southeast Asia starting in June 2021.
+To maintain production processes amid the pandemic
+conditions and protect our employees, we continuously
+review the behaviors and measures developed as part of our
+Safe Production Initiative so as to prevent possible chains of
+infection between the people working in the network and
+adjust them if necessary.
+Group Management Report
+VEHICLE PRODUCTION LOCATIONS OF THE VOLKSWAGEN GROUP
+Share of total production 2021 in percent
+> EFFECTIVITY.EFFICIENCY
+> PRODUCTION.NETWORK
+Production is supporting the new Group strategy NEW AUTO
+with its "one.PRODUCTION" functional area strategy, which
+was also recently developed. By adopting a common approach
+for the thematic focus of our activities, we aim to pool the
+strengths and potential of our global production and logistics
+across brands and take advantage of the resulting synergy
+effects. The production strategy is guided by our five strategic
+goals:
+"one.PRODUCTION" production strategy
+19 locations (37%)
+ASIA
+153
+Vertical integration
+Sustainable Value Enhancement
+AFRICA
+6 locations (5%)
+SOUTH AMERICA
+7 locations (7%)
+NORTH AMERICA
+34 locations (49%)
+EUROPE
+4 locations (2%)
+> ENVIRONMENT.RESPONSIBILITY
+expected to significantly increase range and shorten charging
+times further. The partnership with Gotion High-Tech Co.,
+Ltd. was deepened in the reporting period on the basis of a
+substantial buy-in in May 2020. The Volkswagen Group
+entered a strategic cooperation framework with the major
+Chinese battery manufacturer headquartered at Hefei. The
+goal of both partners is to industrialize the planned battery
+cell production at the Salzgitter site.
+cesses.
+In fiscal year 2021, the main task for Purchasing (formerly
+Procurement) was once again to safeguard supplies, and to
+help create competitive, innovative products and optimize
+cost structures. In addition, we continued to drive digitalized
+purchasing processes forward. The first half of 2021 was
+marked by significantly higher demand for Group vehicles,
+though it became apparent that the capacity that had been
+drastically reduced in 2020 due to the pandemic could not be
+built up quickly enough in many areas. As a result, a large
+number of raw materials and components saw growing short-
+ages of market capacity in 2021; one example being semi-
+conductors, also due in part to the parallel increase in
+demand in the consumer, IT and telecommunications sec-
+tors, which led to supply bottlenecks and price increases.
+Purchasing strategy
+The new Group strategy NEW AUTO also stands for more
+speed, focus and stringency within the Purchasing division,
+accelerating change even more. In 2021, the Purchasing
+division launched the functional area strategy NORTH STAR, a
+cross-organizational, comprehensive strategic program. Along-
+side short-term cost targets, the program seeks to improve
+our supply situation, increase product quality and boost
+innovative power and sustainability. Its goals are based on
+the NEW AUTO Group strategy and are driving Volkswagen's
+transformation also from within the Purchasing division.
+NORTH STAR is also creating optimized structures for our
+purchasers and setting further focus areas with the digitali-
+zation of our processes and increased employee orientation.
+E-mobility
+A key task for Purchasing is to safeguard supplies for the
+continually growing requirements of the e-mobility offensive
+over the next five to ten years in a sustainable way, while
+optimizing cost structures.
+When awarding contracts to our electric mobility part-
+ners, we lay down requirements as regards sustainable
+supplier sources, transparent, traceable supply streams, and
+energy- and carbon-optimized supply chains. We pool global
+demand from the European, American and Asian markets
+and award Group contracts with the aim of achieving cost
+leadership for electric mobility solutions. To this end, we
+consider diversification in conjunction with dual-supplier
+strategies as well as localization of the supplier portfolio for
+all core components of the electric vehicle fleet in an effort to
+reduce economic and geopolitical risks.
+Digitalization of supply
+We are working systematically to implement a completely
+digitalized supply chain. This is intended to help us to
+safeguard supply and leverage synergies throughout the
+Group in order to take a leading position in terms of cost and
+innovation. We are therefore creating a shared database and
+using innovative technologies to enable efficient, networked
+collaboration in real time – both within the Group and with
+our partners. The Purchasing division aims to standardize
+transactions with our suppliers in the future and automate
+them where possible. This will not only reduce transaction
+costs but will also accelerate business processes. Potential
+supply risks can be reported in an automated way in order to
+identify measures and alternatives faster together. The
+cornerstone for the future of Purchasing was laid in 2018 in
+the form of Group Purchasing's digitalization strategy. This
+strategy aims not only to eliminate the weaknesses of Pur-
+chasing's IT system environment but also to increase the
+organization's effectiveness, efficiency and future viability.
+The initial systems, such as a bot project for automating
+supply chain business processes, were developed and inte-
+grated into the existing system environment.
+Structure of key purchasing markets
+Our purchasing process is organized at a global level, with a
+presence in the key markets around the world. This allows us
+to purchase production materials, investments in property,
+plant and equipment, and services worldwide at the quality
+required and on the best possible terms. Networking among
+the brands' purchasing organizations enables us to leverage
+synergies across the Group in the various purchasing markets.
+In addition to the brands' purchasing units, the Volks-
+wagen Group operates seven regional offices. In growth mar-
+kets, we identify and train local suppliers to generate cost
+advantages for all Group production sites. In this context, we
+are also focusing on start-ups and software suppliers. In
+familiar and established markets, the regional offices support
+access to the latest technologies and innovations.
+Management of purchased parts and suppliers
+Today's supplier portfolio is characterized by global distri-
+bution, segmentation and diversification. We address the
+challenges this presents by supporting and monitoring the
+industrialization of suppliers with our purchasing supplier
+management. This starts with auditing and assessing
+suppliers in preparation for the nomination process and
+150
+Group Management Report
+Sustainable Value Enhancement
+PURCHASING
+149
+continues with monitoring the maturity of the industriali-
+zation of purchased parts, to the complete acceptance and
+confirmation of the required production capacity at the
+individual supplier locations. The complexity of the com-
+ponents requires regular monitoring of production processes
+in order to identify any disruptive factors at an early stage
+and take action to remedy these. Close cooperation with the
+quality assurance units at the production sites is crucial for a
+stable supply of purchased parts for our start-up and series
+production vehicle projects. The global supplier management
+network worked reliably, particularly in the face of the
+persistent challenges posed by the Covid-19 pandemic, and
+supplies to vehicle and component plants were largely safe-
+guarded throughout the reporting period. However, the
+supply situation remained precarious in fiscal year 2021,
+especially for semiconductors, resulting in limited vehicle
+availability for customers.
+Sustainability in supplier relationships
+One of the most modern laboratories for cell research and
+development in Europe was opened at the Salzgitter site in
+the second half of 2021. In the future, some 250 experts will
+conduct research in the areas of cell development, analytics
+and testing at a total of four laboratories. For the Volkswagen
+Group, Salzgitter is also a pioneer in sustainable responsi-
+bility throughout the service life of the battery and opened
+the Group's first facility for recycling high-voltage vehicle
+batteries here. The objective is industrialized recovery of
+valuable raw materials such as lithium, nickel, manganese
+and cobalt in a closed loop, as well as aluminum, copper and
+plastic. In collaboration with partners, Volkswagen will
+achieve a recycling rate of more than 90% percent in the
+future through mechanical and hydrometallurgical pro-
+By standardizing properties like format and geometry, the
+unified battery cell provides the basis for a competitive
+orientation of electric mobility at Volkswagen. There are
+plans to introduce unified battery cells in 2024. Six gigafac-
+tories will be required in Europe alone to meet our needs
+until 2030. Two of the six gigafactories planned for Europe
+have already been decided. In addition to the site of its
+partner Northvolt AB in Skellefteå, Sweden, Volkswagen is
+building its own gigafactory in Salzgitter.
+Battery
+nology activities and a value creation strategy coordinated
+throughout the Group. Synergies are to be leveraged across
+both traditional technologies and future areas to advance the
+transition to e-mobility.
+151
+Sustainable Value Enhancement
+Group Management Report
+Volkswagen expanded its shareholdings in different
+companies again in 2021 within the framework of its electric
+mobility strategy. The primary transactions in the past fiscal
+year were the capital increase at Swedish battery partner
+Northvolt AB for continuing the stake of about 20%. Volks-
+wagen also increased its stake in QuantumScape with the
+goal of driving forward the joint development of solid-state
+battery technology. In the future, solid-state batteries are
+The aim is further improvement of future viability and
+competitiveness through cross-brand management of tech-
+TECHNOLOGY
+In respecting human rights in our supply chains, we are
+guided by international agreements and frameworks as
+required by the UN Guiding Principles on Business and
+Human Rights and the principles and conventions of the
+OECD. To comply with these requirements, we introduced a
+human rights due diligence management system in 2021 to
+mitigate human rights risks in our supply chain. An addi-
+tional management system has been set up to effectively
+manage the sometimes extensive risks in the raw material
+supply chains. This sets out in detail the prioritization and
+processing of the raw material supply chains that we classify
+as particularly high risk. Transparency requirements for our
+battery suppliers constitute an important basis for respon-
+sible raw material purchasing. These contractual require-
+ments include the disclosure of the entire upstream supply
+chain by our battery suppliers and are effective for new
+contracts awarded.
+With regard to decarbonization, the Volkswagen Group is
+striving to continuously reduce greenhouse gas emissions or
+avoid them altogether over the entire life cycle of a vehicle.
+The Group's transformation into a provider of sustainable
+mobility solutions and in particular the trend towards
+electric mobility are shifting the action required from the
+service life of the vehicle to supply chains and the manufac-
+ture of vehicles and components. We are aware of our social
+responsibility and are committed to the Paris Climate Agree-
+ment. We have therefore incorporated the use of renewable
+energy, among other things, into the specifications for cell
+manufacturers.
+Our activities in 2021 continued to focus on compliance,
+decarbonization and human rights.
+correct the violations; this also includes the upstream supply
+chain. Despite the adversities caused by the Covid-19 pan-
+demic, we once again stepped up our focus on advanced and
+continuing training for suppliers. In fiscal year 2021, more
+than 1,700 thousand suppliers took advantage of our training
+programs such as digital supplier training courses and
+e-learning.
+In our sustainability rating, we determine suppliers'
+sustainability performance by means of self-disclosures and
+risk-based on-site audits. Sustainability ratings had been
+incorporated into the global procurement processes of
+relevant companies by the end of the reporting period. By
+then, we had obtained 12,483 ratings for suppliers, covering
+85% of the total order volume. Both the validation of the
+questionnaire and the on-site audits are carried out by
+selected service providers. As a rule, contracts are not
+awarded to suppliers who fail to meet our requirements
+concerning compliance with sustainability standards. Tying
+award decisions to sustainability criteria is one of the
+strongest levers for enforcing these. We address existing
+sustainability risks and violations of sustainability principles
+by systematically defining and implementing measures to
+Successful relationships with our business partners are based
+on respecting human rights, compliance with occupational
+health and safety standards, active environmental protection
+and combating corruption. These sustainability standards are
+defined in the contractually binding Volkswagen Group
+requirements for sustainability in relations with business
+partners (Code of Conduct for Business Partners). The Code of
+Conduct for Business Partners also sets out the expectation
+that business partners will take steps to ensure compliance in
+their supply chain. We review compliance with the require-
+ments, which has been an explicit condition for award of
+contract since 2019, using sustainability ratings for relevant
+suppliers. The relevance of a business partner for the S-Rating
+depends, among other things, on the size of the company or
+the risk exposure arising from the type of service provided.
+The newly created Technology Board position will be respon-
+sible for the following focus areas: all activities of Volkswagen
+Group Components, the marketing of the Volkswagen
+platforms and components to third parties, the development,
+manufacturing and procurement of battery cells (Cell and
+Battery Strategy initiative), the areas of charging and energy
+with the corresponding joint ventures worldwide (Charging
+and Energy Services initiative).
+> DIGITALIZATION.INNOVATION
+> TEAM.WORK
+The international, cross-brand production network enables
+the process from the supplier to the factory and assembly
+line, and from the factory to dealers and customers. Enduring
+efficiency is a prerequisite for our competitiveness. To be able
+to meet the challenges of the future, we rely on holistic
+optimizations, forward-looking innovations, robust supply
+streams and structures, and a flexible team. At 8.3 million
+vehicles, global vehicle production in fiscal year 2021 was
+7.0% down on the prior-year figure, which had been affected
+by national measures to contain the Covid-19 pandemic.
+Productivity increased by 1.1% year-on-year.
+Our scenario-based strategy process provides the
+thematic framework for the strategic goals. The overarching
+aim is to increase productivity and profitability. We want to
+ensure that our sites remain competitive by having our
+factories work at optimal capacity, enabling us to manu-
+We also align our internal processes and structures to the
+methods and new forms of working created by digital
+innovation. This results in project teams operating across dif-
+ferent business areas, new forms of cooperation, a more
+intensive relationship with the international start-up scene, a
+consolidation of venture capital expertise - as a form of
+supporting innovative ideas and business models - and new
+lean systems and cloud-based IT solutions.
+We are making highly targeted use of the opportunities of
+digitalization in Sales, which include an improved customer
+approach. Our actions are guided by a clearly defined strategy
+that requires extensive cooperation between the brands and
+markets to achieve the greatest possible synergies. Our aim
+here is to create a completely new product experience for the
+customers of our brands – one which impresses with a seam-
+less communication process, from the initial interest in
+purchasing a vehicle, to servicing and ultimately to the sale of
+the used car. In doing so, we are opening up new business
+models relating to the connected vehicle – in particular with
+regard to mobility and other services. Vehicles are becoming
+an integral part of the customer's digital world of experience.
+As part of our electrification campaign, we aim to offer our
+customers worldwide around 70 completely battery-electric
+vehicles and approximately 60 hybrid models by 2030. This
+campaign will be complemented by vehicle-related, custom-
+er-focused offerings, such as customized charging infra-
+structure solutions and mobile online services. The Volks-
+wagen Group is thus transforming from an automotive manu-
+facturer into a mobility service provider. This poses new
+challenges for Sales.
+E-mobility and digitalization in Group Sales
+In the financial services business, we use two strategic
+indicators of customer satisfaction and customer loyalty. The
+two indicators are currently being revised in light of changes
+in customer needs and in the product range, the short- and
+long-term impact of the Covid-19 pandemic and the strategic
+alignment of financial services in the Volkswagen Group.
+Conquest rate. Newly acquired passenger car customers as
+a proportion of a brand-specific selection of competitors.
+This KPI is stable for the Volkswagen Passenger Cars brand,
+while Audi and ŠKODA show improved conquest rates.
+In the core European markets, the brand image of the Volks-
+wagen Passenger Cars brand stabilized at the level of the
+market as a whole in 2021, and confidence in the brand
+improved. Porsche remains in top position in the image
+ranking.
+>
+> Loyalty rate. Proportion of customers of our passenger car
+brands who have bought another Group model. Thanks to
+their faithful customers, the Volkswagen Passenger Cars,
+ŠKODA and Porsche brands have remained in the upper
+loyalty rankings of the core European markets in compari-
+son with their competitors for a number of years. Follow-
+ing a decrease in the loyalty rates between 2016 and 2018,
+these figures improved for all group brands. Compared to
+other manufacturer groups, the Volkswagen Group contin-
+ues to hold a top spot in the core European markets in
+terms of loyalty.
+Customer satisfaction, customer loyalty and customer conquest
+The Volkswagen Group aims its sales activities at exciting its
+customers. This is our top priority, as satisfied customers
+remain loyal to our brands and recommend our products and
+services to others. In addition to satisfaction with our prod-
+ucts and services, we value our customers' emotional connec-
+tion to our brands. It is important for us to retain customers
+and win new ones. To measure our success in this area, we
+compile and analyze two strategic indicators for the passen-
+ger car-producing brands:
+As part of our new strategy NEW AUTO we have intro-
+duced strategic base initiatives for China as the largest single
+market and North America as the market with the greatest
+growth potential due to their considerable strategic impor-
+tance for the Volkswagen Group.
+The Volkswagen Group's financial strength and profitability
+is attributable to an extensive portfolio of strong brands. The
+objective of our Best Brand Equity instrument is to contin-
+uously sharpen the brand profiles and to distinguish as
+clearly as possible between the customer segments served by
+the brands, supplementing them as required with tailored
+solutions. Our aim is to achieve high market saturation with
+great efficiency and a low level of brand cannibalization.
+Market positioning is an important element for increasing
+brand values. To this end, we have established automobile-
+specific customer segmentation to steer the positioning of
+our brands which we consistently apply throughout the
+strategy and product process.
+Group Management Report
+Sustainable Value Enhancement
+156
+Together with their sales partners and importers, our
+passenger car brands agreed on a procedure for integrating
+state-of-the-art products and services into the sales network.
+The priority thereby is the safe and legally compliant han-
+dling of customer data and the way in which this is processed
+for digital products and services or in connection with the
+vehicle purchase. The legal requirements for handling
+customer data have been tightened in many countries. At the
+same time, new Group vehicles that are permanently con-
+nected to the internet are about to be launched. We are
+increasingly investing in distribution systems and processes
+with the goal of further digitalizing and improving the
+individual customer experience in all distribution channels.
+Fleet customer business
+Business relationships with fleet customers are often long-
+term partnerships. In a volatile environment, this customer
+group guarantees more stable sales of well-equipped, profit-
+able vehicle models than the private customer segment.
+The Volkswagen Group has an established base of busi-
+ness fleet customers, especially in Germany and the rest of
+Europe. Our extensive product range enables us to satisfy
+their individual mobility needs from a single source.
+With these strategic goals we have created content clusters in
+which expert teams work on the strategic topics relevant for
+production in the Group. Examples include the design of our
+global production network, increasing efficiency in produc-
+tion processes, the reduction and offsetting of environmental
+impact throughout the production process, and the digital
+transformation of production and working processes and of
+collaboration formats.
+Group Management Report
+Sustainable Value Enhancement
+158
+The quality of our products and services plays a key role in
+maintaining customer satisfaction. Customers are particu-
+larly satisfied and loyal when their expectations of a product
+or service are met or even exceeded. Appeal, reliability and
+service determine quality as it is perceived by the customer
+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 quality.
+QUALITY
+In the Power Engineering segment, we help our cus-
+tomers to secure the availability of machinery with MAN
+PrimeServ. The global network of more than 100 PrimeServ
+locations stands for excellent customer focus and offers,
+among other things, replacement parts of genuine-part
+quality, qualified technical service and long-term main-
+tenance contracts.
+services that aim to guarantee fuel efficiency, reliability and
+wide vehicle availability. By offering vehicles equipped with an
+all-electric or hybrid drive system, we take into account both
+customers' wishes and our responsibility to contribute to
+emission-free transportation. Workshop service and service
+contracts are intended to offer customers a high degree of
+certainty, in addition to a high level of quality. We are
+reducing servicing times and costs with a view to the vehi-
+cles' total operating costs.
+We regard ourselves as an innovative and sustainable
+mobility provider for all commercial and private customers
+worldwide with a unique product portfolio encompassing
+our successful brands and innovative financial services.
+Around the world, our commercial vehicles business also
+prides itself on products of quality and on customer focus.
+Our range of trucks, buses and engines is complemented by
+In After Sales, we are supporting the changing world of
+mobility and our consistent orientation on e-mobility by
+developing new services and innovative concepts. As the
+Group transforms from vehicle manufacturer to a leading,
+global software-centric mobility provider, our software com-
+pany CARIAD is working on the development of the new
+software architecture for vehicles in future. With the resulting
+connectivity services, we will be able to leverage synergies in
+After Sales across all the Volkswagen Group's brands and take
+advantage of new opportunities to boost customer loyalty.
+In addition to individual service, the timely provision of
+genuine parts is essential to assure passenger car customer
+satisfaction in After Sales. The genuine parts supplied by our
+passenger car brands and the expertise of the service centers
+stand for quality, safety and value retention of our customers'
+vehicles. With our global after sales network including more
+than 130 of our own warehouses, we are creating the pre-
+requisites to supply almost all our authorized service faci-
+lities around the world within 24 hours. We regard ourselves
+as a complete provider of all products and services relevant to
+customers in the after sales business. Together with our
+partners, our mission is to ensure the worldwide mobility of
+our customers. The partner businesses offer a comprehensive
+portfolio of services in all vehicle classes. We are contin-
+uously expanding our range of tailored services in order to
+improve convenience for our customers and increase cus-
+tomer satisfaction.
+After Sales and Service
+The Volkswagen Group's share of this customer segment
+remained consistent at 42.1 (42.1) %. Outside Germany, the
+Group's share of registrations by fleet customers in Europe
+was 26.5 (26.6) %. This shows that fleet customers' confidence
+in the Group remains at a high level. We were able to consoli-
+date our strong market position in the fleet customer busi-
+ness in Europe.
+157
+Sustainable Value Enhancement
+Group Management Report
+In the Digital After Sales project, we are modernizing
+processes and IT systems in After Sales. By adopting an
+approach that focuses product and service development on
+the specific needs of both dealers and customers, we aim to
+reduce the time needed for administrative tasks at the dealers
+through automated, interrelated services and also stabilize
+existing IT systems and boost efficiency. Innovative digital
+after-sales services will additionally improve the customer
+experience.
+SALES AND MARKETING
+In an overall passenger car market in Germany that
+declined by 10.1% in the reporting period, business fleet
+customers accounted for 16.6 (16.2)% of total registrations.
+In addition, Group Logistics is using the two roll-on/roll-
+off (RoRo) charter ships powered by low-pollution liquefied
+natural gas (LNG) for transporting vehicles across the North
+Atlantic. Group Logistics plans to replace conventionally
+operated ships on the North Atlantic route with four more car
+freighters with the same propulsion system from the end of
+2023. In contrast to other LNG-fueled marine engines, Group
+Logistics' charter ships are climate-friendly because the high-
+pressure technology of the two-stroke engines from MAN
+Energy Solutions allows almost no methane to escape. The
+dual-fuel engines will also enable non-fossil fuels - biogas
+(bio-LNG), e-gas (synthetic gas) from renewable sources, or
+biofuel- to be used in the future so that carbon emissions
+can be reduced even further.
+This lays the technical and IT-specific foundations for Group-
+wide use in production. Work is being done on the use of
+process mining (visualization and systematic evaluation of
+IT-based processes in their entirety) so that overarching
+production and logistics processes can be digitally mapped
+and better understood. Initial fields of application in process
+mining are being worked on together with Group Logistics
+and individual sites. At the Kassel site, for example, the
+causes of faults in exhaust systems are being identified to
+increase plant efficiency and reduce resource requirements.
+Based on Volkswagen's proprietary computer vision
+platform, artificial intelligence is being used for complex
+label inspections, among other things, and implemented
+across brands at the Group's sites. Here, for example, the
+correct positioning and possible damage to the vehicle's
+name plate are checked. In addition, augmented reality tech-
+nology (which links the virtual world with the physical
+world), particularly through the use of the output medium of
+data glasses, is being tested in initial pilot projects in
+employee training and in remote support and collaboration.
+Digital and innovative technologies are systematically vali-
+dated in the Volkswagen Group and their use for production
+and logistics is piloted and rolled out. This is to enable the
+Group to exploit potential for cost savings in the value chain
+and realize more flexible implementation options as well as
+quality improvements. The goal of the digital transformation
+in production is to simplify the entire process chain and
+make the best possible use of new technologies. Fields of
+innovation in 2021 were computer vision, augmented reality
+and process mining.
+New technologies and digitalization
+The effects of the Covid-19 pandemic and the additional
+global supply bottlenecks, especially for semiconductors,
+caused headwinds for starts of production in the past fiscal
+year. The Volkswagen Group nevertheless succeeded in starting
+up 64 vehicle projects, 26 of which were new products and
+successor products and 38 were product upgrades and deri-
+vatives.
+The acquisition of Navistar increased the Volkswagen Group's
+global production network to 120 sites in which passenger
+cars, commercial vehicles and motorcycles, as well as power-
+trains and various components are manufactured. With 63
+factories, Europe remains the center of production activities,
+and the importance of the Asia-Pacific region is underpinned
+by 34 sites.
+Production sites
+Innovative applications are also being developed locally at
+the plants and are made available to the Group via the central
+cloud-based digital production platform (DPP). Despite the
+Covid-19 pandemic and difficult conditions, the expansion of
+the DPP was driven forward in collaboration with Amazon
+Web Services (AWS) and Siemens. Further production sites
+were linked up to the DPP and equipped with the first appli-
+cations developed in-house for improving production and
+logistics. 2021 also saw increased exchange of local solutions
+between the sites via the DPP. Examples of overarching
+solutions on the DPP include localization services for vehicles
+and car bodies on the factory premises, intelligent plant
+monitoring systems, digital shop floor management, and
+quality processes and end-to-end quality control loops
+supported by artificial intelligence. Moreover, collaborative
+work is being done on predictive maintenance applications
+(predictive, proactive technology for maintenance and ser-
+vicing) as well as data analytics functions for analyzing and
+comparing cross-plant processes.
+introduction of the Modular Electric Drive Toolkit (MEB),
+which we are using to complement our range with additional
+battery-electric vehicles. We have been manufacturing bat-
+tery-electric vehicles based on the MEB in Zwickau, the Volks-
+wagen Group's first electric car factory, since 2019. One
+example is the ID.3 from the Volkswagen Passenger Cars
+brand. The portfolio of the MEB platform in Zwickau was
+expanded in 2021 through the addition of the CUPRA Born
+and the Audi Q4 e-tron. Furthermore, we use an all-electric
+platform for premium and sports brands - the Premium
+Platform Electric (PPE) - to leverage synergies across brands
+in production.
+Sustainable Value Enhancement
+154
+With its new Group strategy NEW AUTO, the Volkswagen
+Group has set itself the goal of developing sustainable,
+connected, safe and tailored mobility solutions for future
+generations and accelerating the Group's realignment from
+vehicle manufacturer to a leading, global software-centric
+mobility provider. The foundation for these efforts was the
+The flexible production capacities provided by our plat-
+forms allow us to respond to market challenges, make
+requirements-based use of the production network and
+leverage synergies across brands through multibrand sites.
+Currently, almost half of the 46 passenger car locations are
+already multibrand locations. The Bratislava plant continues
+to serve as a prime example in the Group, producing vehicles
+for the Volkswagen Passenger Cars, ŠKODA, SEAT, Audi and
+Porsche brands.
+The Group's production network encompasses 120 produc-
+tion sites, including our Chinese joint ventures. Stan-
+dardizing production with uniform product concepts, plants,
+operating equipment and production processes within a
+product family is a key factor in our forward-looking pro-
+duction. We are constantly enhancing our production con-
+cepts and aligning them with new technologies to achieve
+ambitious targets in the individual projects.
+In addition, Group Logistics permanently operates two
+charter ships on European sea routes using certified renew-
+able fuel. Used cooking oils and fats - waste and residual
+materials from the catering and food industries, for example,
+that cannot be used for further processing into food or
+animal feed - provide the raw material for the biofuel, which
+produces at least 85% less CO2 than conventional fossil fuels.
+facture high-quality products that give customers maximum
+benefit at competitive prices.
+Group Management Report
+The Volkswagen Group consciously harnesses the inno-
+vative power generated by our continuously growing innova-
+tion ecosystem. The Group's open innovation platform
+provides the central point of contact for start-ups and other
+innovative companies to work together on new solutions and
+concepts for production.
+Global production network
+GoTozero Impact Factory
+Specific examples of the use of the railways as a low-
+emission mode of transport are the delivery of battery
+modules to Braunschweig from the supplier in Wrocław,
+Poland, and the transport of battery systems from the com-
+ponent site in Braunschweig to the Zwickau plant in order to
+produce completely battery-electric vehicles.
+of CO2 through the use of green electricity in rail transport in
+Germany in collaboration with Deutsche Bahn AG.
+With the Industrial Cloud, the Volkswagen Group is going
+one step further and establishing an open ecosystem based
+on DPP together with Amazon Web Services (AWS) and
+integration partner Siemens, in which IoT (Internet of Things)
+and data analytics solutions will be made available for a more
+efficient and transparent value chain in the future. The
+Industrial Cloud community already had over 15 industrial
+partner companies in 2021.
+The measures the Volkswagen Group is taking to achieve
+future carbon-neutral logistics include, for example, moving
+shipments from road to rail and almost complete avoidance
+In the joint "goTOzero Impact Logistics” initiative, Group and
+brand logistics departments work together to help achieve
+the goals of the goTOzero environmental mission statement.
+Continuous optimization of the transport network and logis-
+tics processes can reduce emissions - this includes the use of
+digitalization tools. The use of new low-emission technol-
+ogies for transporting production materials and vehicles will
+also be continuously analyzed and accelerated.
+We record and catalog measures in another IT system and
+make these available for a Group-wide exchange of best
+practices. In the reporting period, around 1,544 implemented
+measures in the area of environment and energy were
+tracked and documented in this system via the Maß-
+nahmen@Web system. They serve to improve infrastructure
+and production processes for passenger cars and light com-
+mercial vehicles and are incorporated into the decarboni-
+zation index (DKI), for example. These activities are beneficial
+from an environmental and often also from an economic
+perspective as well as having a positive effect on the Group's
+environmental indicators.
+We are encouraging networking and communication
+between the brands worldwide in order to leverage synergies.
+Our environmental experts meet regularly in working
+groups. In addition, we provide our managers and employees
+with specific training on the topic of environmental protec-
+tion.
+We implemented the ECMS in the first Group companies
+in 2020 and rolled it out to others in 2021. This process is
+being actively supported, monitored and tracked.
+GoTozero Impact Logistics
+We have developed a checklist to help the plants deter-
+mine the status of their progress on their path to becoming a
+“Zero-Impact Factory”. This currently comprises 143 environ-
+mental criteria and provides the basis for the continuous
+reduction of energy consumption and CO2 emissions, for
+example.
+adverse environmental impact with an underlieing vision of
+creating a factory that has no adverse environmental impact.
+155
+Sustainable Value Enhancement
+Group Management Report
+We are planning the production of tomorrow with our
+"one.PRODUCTION" functional area strategy. Emissions levels
+and the use of resources at Volkswagen Group sites require
+particular attention. The goTOzero Impact Factory program is
+developing specific steps toward production that has no
+To implement such and other programs, a management
+system will be introduced at all production sites worldwide,
+linking the main compliance issues with environmental
+management. This environmental compliance management
+system (ECMS) provides a solid foundation for compliance
+with all external and internal rules and regulations relating to
+the environment within the context of production processes.
+%
+17.0
+17.9
+Employees
+2020
+2021
+Vocational trainees¹
+Graduate recruits²
+Total management
+PROPORTION OF WOMEN
+as of December 31
+162
+The Group also has a large number of collective regula-
+tions in place to make it easier for employees to balance the
+demands and needs of work and home life and allow staff to
+arrange their own individual working model. In addition to
+flexible working hours and the use of working time accounts
+and flextime, these include variable part-time work and shift
+models, leave of absence programs enabling employees to
+care for family members, the possibility to convert salary
+components into paid leave, childcare services that are
+associated with the company or are company-owned, and
+remote working. “Meine AusZeit" is one of the latest pro-
+grams to be offered by Volkswagen AG and allows employees
+to take a self-financed leave of absence with an upfront
+payment from the Company.
+In order to encourage women with great potential to
+advance within the Company, we have set targets relating to
+the development of the proportion of women in manage-
+ment for every Board of Management business area at Volks-
+wagen AG. This approach is supported by many different
+measures ranging from cross-brand mentoring programs to a
+quota system for the management selection procedure and
+targets for the share of women among external hires.
+women in management positions. For Volkswagen AG, we
+have set targets for the proportion of women in management
+in accordance with German legislation. Volkswagen AG has
+achieved the targets set in line with the Gesetz zur gleich-
+berechtigten Teilhabe von Frauen und Männern an Führungs-
+positionen (German Act on the Equal Participation of Women
+and Men in Leadership Positions) and section 76(4) of the
+Aktiengesetz (AktG - German Stock Corporation Act). As of
+December 31, 2021, the proportion of women in the active
+workforce at the first level of management (senior manage-
+ment, top management and brand Board of Management)
+was 13.5% (target: 13.0%). At the second level (management)
+it was 18.3% (target: 16.9%). The used time credits from
+deferred compensation (time asset bonds) are not taken into
+account. For the new period up to the end of 2025, Volks-
+wagen AG has set itself the target of 16.5% women in the first
+level of management and 23.4% women in the second level of
+management, each as a proportion of the active workforce.
+The Group Board of Management and Supervisory Board are
+regularly informed of the figures achieved and the current
+target paths.
+Group Management Report
+Sustainable Value Enhancement
+20.1
+A human resources policy that promotes a work-life balance
+is a major component of Volkswagen's attractiveness as an
+employer; in particular, it contributes to greater gender
+equality. We are working continuously to develop family-
+friendly working time models and to increase the number of
+Increasing attractiveness as an employer and development programs
+for specific target groups
+Young people can also take part in graduate trainee pro-
+grams at the other Group companies as well as at the Group's
+international locations, such as ŠKODA in the Czech Republic,
+SEAT in Spain or Scania in Sweden.
+women.
+The Covid-19 pandemic brought fundamental changes to
+the way we work and collaborate with one another. One of the
+consequences of the pandemic is that hybrid working - a
+combination of remote working and working onsite - is
+increasingly becoming the norm. This has also forced the
+Volkswagen Group to modify its organization of work and
+collaboration and prompted it to launch several initiatives
+during the reporting period. One of these is the Office 2025
+project, which led to the development of a holistic concept
+spanning the dimensions of people, space and technology
+20.5
+8.3
+32.5
+Volkswagen offers two structured entry and development
+programs for university graduates and young professionals.
+In the StartUp Direct trainee program, graduate trainees gain
+an overview of the Company over two years while working in
+their own department and also take part in supplementary
+training measures. University graduates interested in work-
+ing internationally can participate in the 18-month StartUp
+Cross program. The aim here is to get to know the Company
+in all its diversity and to build up a broad network. During
+their participation in the program, young professionals
+become familiarized with several locations in Germany and
+other countries by working in various departments. Both
+programs also include several weeks' experience working in
+production. In 2021, Volkswagen AG hired a total of 82 gradu-
+ate trainees as part of these programs, 31.7% of whom were
+Sustainable Value Enhancement
+Group Management Report
+In addition to fulfilling statutory requirements, Volks-
+wagen's Health department places strong emphasis on preven-
+tive approaches with regard to health, fitness and perfor-
+mance. Employees are given the opportunity to have regular
+check-ups. In the follow-up appointment, they are offered
+Preventive healthcare and occupational safety are key ele-
+ments of human resources policy in the Volkswagen Group.
+In fiscal year 2019, we underpinned this by drawing up a
+corresponding Group Policy. This defines basic requirements
+and objectives relating to occupational health and safety,
+laying down rules for the organization thereof as well as the
+responsibilities of the Group, brands and companies.
+Preventive healthcare and occupational safety
+As in other companies, at Volkswagen the pandemic acted
+primarily as a catalyst for the breakthrough of digitalization
+in knowledge work: virtual communication and collabo-
+ration, and new formats of knowledge transfer and training,
+for example through podcasts or online tutorials, were set up
+and expanded at short notice.
+In July 2021, Volkswagen held a “Digital Week” at its
+Wolfsburg plant on the hybrid working world with numerous
+interactive events, around 40 speakers and over 20,000
+attendees.
+-
+31.7
+that focuses on the topics of modular working environments,
+desk sharing and technical infrastructure, including hardware
+and software. Volkswagen AG, which first entered into its
+works agreement for remote working back in 2016, made use
+of this agreement in 2021 - a year dominated by the global
+pandemic – to give its employees every opportunity to work
+remotely and thus safeguard against infection as far as
+possible. Existing regulations were updated in the reporting
+period at Volkswagen AG and Porsche, for instance, so as to
+make working arrangements more flexible.
+1 Excluding Scania and Navistar
+2 Volkswagen AG
+Management
+Senior management
+Top management
+7.0
+11.43
+12.5
+17.1³
+17.9
+14.93
+15.9
+3 Prior-year figures adjusted
+Development of university graduates
+Vehicle-related business
+The core component of training at Volkswagen is vocational
+training or, for young people eligible to enter university,
+cooperative education (dual study programs combining uni-
+versity studies with on-the-job training). As of the end of
+2021, the Volkswagen Group trained 17,151 young people. We
+have introduced the principle of dual vocational training at
+many of the Group's international locations over the past few
+years and are continuously working on improvements. Once
+a year, Volkswagen honors its highest-achieving vocational
+trainees in the Group with the Best Apprentice Award.
+> External employer ranking. This involves taking part in the
+"Great Place to Work" 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. For 2023, we plan to
+participate in the global ranking of “Great Place to Work".
+In the European ranking, we achieved our targeted top 20
+position in the reporting year. Volkswagen Financial
+Services AG was represented in other national and inter-
+national best-employer rankings in 2021.
+One strategic indicator has been defined for the financial
+services business:
+ment, the uppermost of our three management tiers, to
+25.0% in 2025; in the past fiscal year this was 20.3 (18.7) %.
+The diversity index in fiscal year 2021 was 127 compared to
+117 in the prior-year.
+> Diversity index. Given the cultural diversity in our global
+markets and the growing economic momentum, success in
+a highly competitive marketplace requires an ever-wider
+range of experience, world views, solutions to problems
+and product ideas. The diversity of our workforce provides
+potential for innovation in this area, which we aim to make
+even better use of in future. As we establish a diversity
+management system across the Group, this strategic
+indicator is being used to show the trends in the pro-
+portion of women in management and the internationali-
+zation of top management as a percentage of the active
+workforce in the Group as a whole, excluding vocational
+trainees and employees in the passive phase of their partial
+retirement. In particular, it underpins the objective of the
+human resources strategy, which is aimed at contributing
+to an exemplary leadership and corporate culture. The
+figures for the proportion of women in management
+(management, senior management, top management
+including Group Board of Management members) and the
+internationalization of top management are placed equally
+weighted in an index and the figures for the year 2016 set
+to an index value of 100 in each case. The proportion of
+women in management amounted to 16.3% in 2021 and
+was 1.2 percentage points up on the prior-year level. We
+aim to raise this figure to 20.2% by 2025. Our goal is to
+increase the level of internationalization in top manage-
+> External employer attractiveness. The ability to recruit top
+talent is of decisive importance, particularly in view of the
+Company's transformation into one of the world's leading
+providers of sustainable mobility solutions and the asso-
+ciated development of new business fields. We use this
+strategic indicator once a year to check the positioning of
+the major passenger car-producing brands in the brand's
+home country. Rankings in surveys conducted by the Uni-
+versum Institute, in which we aim to achieve ambitious
+scores set individually for the Group brands featured, serve
+as the basis for this. In fiscal year 2021, the Porsche and
+ŠKODA brands fully met and partially exceeded the targets
+set for them. While SEAT partially achieved the targets, the
+Volkswagen Passenger Cars, Volkswagen Commercial Vehi-
+cles and Audi brands did not meet their targets.
+> Internal employer attractiveness. This indicator is deter-
+mined by asking respondents, as part of the Stimmungs-
+barometer (opinion survey), whether they perceive the
+respective company as an attractive employer. The opinion
+survey is conducted in the majority of our Group com-
+panies. The target for 2025 is 89.1 out of a possible total of
+100 index points. A score of 86.8 index points was achieved
+in the reporting period, contrasting with 88.2 points in the
+previous year.
+Group Management Report
+Sustainable Value Enhancement
+160
+Although our new human resources strategy “Transform to
+Tech” already came into effect in fall 2021, the key perfor-
+mance indicators for 2021 are reported in line with the
+predecessor strategy "“Empower to Transform". As part of the
+strategy, we compile and analyze the following performance
+indicators:
+> The Company's human resources work is highly focused on
+employees, strives for operational excellence, and yields
+strategic value-added contributions.
+> An exemplary corporate culture creates an open work
+environment that is characterized by mutual trust and
+collaboration.
+> The Volkswagen Group, including all of its brands and
+companies, aims to be an excellent employer worldwide.
+By extension, we are guided within the framework of our
+strategy by five overarching objectives:
+> The fourth dimension is "We@Volkswagen and the world
+around us". Without long-term social legitimacy at our
+locations and in our markets, we will not be able to carry
+forward our business model in times of accelerated
+changes in values - this applies from an economic, envi-
+ronmental and social perspective. Employees are repre-
+sentatives of the Volkswagen Group and communicate our
+values to society.
+> "All of us@Volkswagen" describes the corporate culture
+dimension. The Volkswagen Group provides a strong
+culture, unique products, fair working conditions, safe
+work, good opportunities for participation and attractive
+development paths.
+wagen Group are groups that trust each other, have a
+common goal and can rely on each other. Yet they also
+discuss matters critically and speak their minds.
+North America 6%
+South America 4%
+Asia-Pacific 15%
+163
+To master the challenges of the transformation, the Group
+and the employee representatives have signed agreements for
+the future that will position the Group's individual brands
+more efficiently and also structure employee career
+prospects. Volkswagen AG's roadmap for digital transfor-
+mation is one example, as is the Audi brand's Audi.Zukunft
+agreement.
+We are also driving large-scale cultural change to achieve
+greater openness and transparency in line with our corporate
+strategy. The seven Volkswagen Group Essentials define the
+shared underlying values and the foundation for cultural
+change across all of the brands and companies:
+> We take on responsibility for the environment and society.
+> We are honest and speak up when something is wrong.
+> We break new ground.
+> We live diversity.
+Vocational training and cooperative education
+in cooperation with the non-profit École 42. The training
+institute in Wolfsburg commenced operations in May 2021
+with initially 170 students from 30 countries. By the end of
+2022, it plans to take on 600 students in Wolfsburg and 600 in
+Berlin, who will learn from and with each other following an
+innovative training approach.
+Volkswagen AG and CARIAD promoted the establishment
+of innovative programming schools in Wolfsburg and Berlin
+The range of learning opportunities is being expanded
+continuously. The Volkswagen Group Academy forges part-
+nerships with renowned external training portals to expand
+online learning, for example on IT topics. The Company has
+set aside additional funds for the transformation of person-
+nel skills made necessary by digitalization. These resources
+are used for special training for the groups of employees and
+departments affected by the transformation. In addition,
+Volkswagen is striking out in new directions with the Faculty
+73 program and is providing in-house training for the soft-
+ware developers who are needed for the digital transfor-
+mation. In 2021, all 94 graduates of the first phase of the
+program were placed within Volkswagen AG. In March 2021,
+100 students embarked on the training program, which is
+now in its third year. The program is designed for employees
+and also external applicants with an affinity for IT and an
+interest in software development.
+Volkswagen Group employees have access to a wide range
+of training measures - from further training in general Com-
+pany-related issues to specific training or personal devel-
+opment programs. Thanks to these opportunities, Volks-
+wagen employees are able to further develop and steadily
+deepen their knowledge throughout their working lives. In
+this process, they are also able to learn from more experi-
+enced colleagues, who pass on their knowledge as experts in
+the vocational group academies. Training measures are based
+on the dual training principle, which combines theoretical
+content with practical experience on the job by means of
+specific tasks.
+expertise in order to perform their jobs. A skills profile lays
+down the specialist and interdisciplinary skills for each job
+and serves as a guide for training measures.
+< 20
+20-29
+30-39 30%
+40-49 26%
+50-59 21%
+60+ 5%
+2%
+16%
+C
+Even after their vocational training has been completed,
+young people at the start of their careers are encouraged to
+continue their professional development in our Company.
+AGE STRUCTURE IN YEARS OF EMPLOYEES
+as of December 31, 2021; in percent
+Sustainable Value Enhancement
+Group Management Report
+Staff training at Volkswagen is organized according to
+vocational groups. These comprise all employees whose tasks
+are based on similar technical skills and who require related
+At Volkswagen, our capacity for innovation and our compe-
+titive position largely depends on the commitment and
+knowledge of our employees, particularly during the
+transformation.
+Training and professional development
+Group-wide activities such as team dialog and the role model
+program are designed to encourage employees to analyze the
+Group Essentials and incorporate them into all work pro-
+cesses. In the role model program, managers from all brands
+strive to improve the corporate culture together with their
+staff.
+> We keep our word.
+> We not me.
+> We are proud of the work we do.
+161
+options for improving their health that are tailored to their
+needs and draw on the latest medical knowledge. Since fiscal
+year 2020, our Health department has faced unique chal-
+lenges due to the spread of the Covid-19 pandemic and the
+measures that needed to be put in place. Our top priority has
+been to safeguard production in the Group without putting
+the protection and health of our employees in jeopardy. To
+this end, we developed and implemented a variety of actions
+such as hygiene measures, setting up dedicated test and
+vaccination centers at Volkswagen locations and providing
+input and guidance from the Health department on the Safe
+Production Initiative, which supports safe and healthy
+manufacturing under pandemic conditions.
+The EU taxonomy is a classification system for sustain-
+able economic activities. An economic activity is considered
+taxonomy-eligible if it is listed in the EU taxonomy and can
+potentially contribute to realizing at least one of the fol-
+lowing six environmental objectives:
+Codetermination and employee participation are important
+pillars of our human resources strategy. Volkswagen aims to
+promote high levels of expertise and a strong sense of team
+spirit. This includes employees' opinions, assessments and
+criticism being heard.
+FIRST-TIME REPORTING FOR FISCAL YEAR 2021
+> The activity is carried out in compliance with the mini-
+mum safeguards, which apply to all economic activities
+and relate primarily to human rights and social and labor
+standards.
+> The activity meets the Do-No-Significant-Harm (DNSH) cri-
+teria defined for this economic activity. These are designed
+to prevent significant harm to one or more of the other
+environmental objectives, e.g. from the production process
+or by the product.
+> The activity makes a substantial contribution to one of the
+environmental objectives by meeting the screening criteria
+defined for this economic activity, e.g. level of CO2 emis-
+sions for the climate change mitigation environmental
+objective.
+conditions:
+An activity is only considered environmentally sustainable,
+i.e. taxonomy-aligned, if it meets all three of the following
+> Protection and restoration of biodiversity and ecosystems.
+> Pollution prevention and control
+> Transition to a circular economy
+resources
+> Sustainable use and protection of water and marine
+> Climate change adaptation
+> Climate change mitigation
+Power Engineering
+As part of the European Green Deal, the European Union (EU)
+has placed the topics of climate protection, the environment
+and sustainability at the heart of its political agenda in order
+to achieve climate neutrality by the year 2050. To this end,
+the EU Action Plan on financing sustainable growth was
+developed that aims to reorient capital flows towards
+sustainable investment, to mainstream sustainability in risk
+management and to foster transparency and long-termism in
+financial and economic activity. The Action Plan comprises
+ten measures and centres around the EU taxonomy (Regu-
+lation (EU) 2020/852 and associated delegated acts).
+BACKGROUND AND OBJECTIVES
+Doing business in an environmentally sustainable way is one of the central challenges of our time.
+The EU has defined criteria for determining the corporate degree of environmental sustainability.
+With our taxonomy-aligned investments in development activities and in property, plant and
+equipment, we are today already shaping our future in an environmentally sustainable way as
+envisaged by the EU taxonomy.
+167
+EU Taxonomy
+EU Taxonomy
+Group Management Report
+For more information on the analysis of a possible IPO of
+Dr. Ing. h.c. F. Porsche AG, please refer to the section entitled
+"Events after the balance sheet date" in the notes to the
+consolidated financial statements.
+We describe the hybrid note we called in the section
+entitled "Shares and Bonds".
+Under the EU taxonomy, the Volkswagen Group is required to
+report on the climate change mitigation and climate change
+adaptation environmental objectives for the first time for
+fiscal year 2021; the disclosure requirements extend to the
+share of economic activities that are taxonomy-eligible and
+that are not taxonomy-eligible in sales revenue, capital
+expenditure and operating expenditure. The figures reported
+relate to the consolidated companies included in the Volks-
+wagen Group's financial statements. Volumes and financial
+168
+EU Taxonomy
+Group Management Report
+Power Engineering
+Power Engineering
+Allocation in the Volkswagen Group
+Research, applied research and experimental
+development of solutions, processes, technologies,
+business models and other products dedicated to
+the reduction, avoidance or removal of greenhouse
+gas emissions for which the ability to reduce,
+remove or avoid greenhouse gas emissions in the
+target economic activities has at least been
+demonstrated in a relevant environment,
+corresponding to at least Technology Readiness
+Level 6.
+Manufacture of technologies aimed at substantial
+greenhouse gas emission reductions in other
+sectors of the economy, where those technologies
+are not covered by other economic activities in the
+manufacturing sector.
+Manufacture, repair, maintenance, retrofitting,
+repurposing and upgrade of low-carbon vehicles,
+rolling stock and vessels.
+Manufacture of equipment for the production and
+use of hydrogen.
+Description of economic activity
+innovation
+9. Professional, scientific and technical activities
+9.1 Close to market research, development and
+3.6 Manufacture of other low-carbon technologies
+REPORT ON POST-BALANCE SHEET DATE EVENTS
+References to the Russia-Ukraine conflict can be found in the
+“Report on Expected Developments” and in the “Report on
+Risks and Opportunities".
+3.3 Manufacture of low-carbon technologies for
+transport
+Environmental objective: mitigating climate change
+3. Manufacturing
+Economic activity in accordance with the EU taxonomy
+The table below sets out the allocation of our activities in
+the vehicle-related business and in Power Engineering to the
+economic activities listed in the EU taxonomy under the
+environmental objective of climate change mitigation.
+Changes may be made to the economic activities in future as
+the rules around the EU taxonomy dynamically evolve.
+The analysis of the economic activities in the context of
+the EU taxonomy has not revealed any activities that con-
+tribute specifically to the environmental objective of climate
+change adaptation.
+The Volkswagen Group's activities in the Power Engi-
+neering Business Area comprise the development, design,
+production, sale and servicing of machinery and equipment.
+These activities also fall under the environmental objective of
+climate change mitigation.
+duction and sale of vehicles and extend to our financial ser-
+vices and other vehicle-related products and services. Activi-
+ties in these areas are suited under the EU taxonomy to
+making a substantial contribution to the environmental
+objective of climate change mitigation by increasing clean or
+climate-neutral mobility.
+The Volkswagen Group's activities in its vehicle-related
+business with passenger cars, light commercial vehicles,
+trucks, buses and motorcycles cover the development, pro-
+In its Group strategy NEW AUTO – Mobility for Generations to
+come, the Volkswagen Group is driving its transformation
+towards becoming one of the world's leading providers of
+sustainable mobility. We pay particular attention here to the
+use of resources and the emissions of our product portfolio,
+as well as those of our sites and plants.
+In addition to the current disclosure obligations, we have
+voluntarily assessed our business activities for taxonomy
+alignment. We already report the relevant figures for passen-
+ger cars and light commercial vehicles, and for our hydrogen
+activities in the Power Engineering Business Area.
+The wording and terminology used in the EU taxonomy
+are currently subject to some uncertainty in interpretation.
+Our interpretation is set out below.
+data for our Chinese joint ventures are therefore excluded. As
+the EU taxonomy is being applied for the first time, prior-year
+figures are not provided.
+3.2 Manufacture of equipment for the production
+and use of hydrogen
+2021/Nonfinancial_Report_2021_e.pdf in English by no later
+than April 30, 2022.
+The combined separate nonfinancial report of Volkswagen AG
+and the Volkswagen Group in accordance with sections 289b
+and 315b Handelsgesetzbuch (HGB German Commercial
+Code) for fiscal year 2021 will be available on the website
+https://www.volkswagenag.com/presence/nachhaltigkeit/doc
+uments/sustainability-report/2021/Nichtfinanzieller_Bericht_
+2021 d.pdf in German and at https://www.volkswagenag.com/
+presence/nachhaltigkeit/documents/sustainability-report/
+SEPARATE NON FINANCIAL GROUP REPORT
+Sustainable Value Enhancement
+Group Management Report
+We are one of the first vehicle manufacturers to require
+our suppliers to have passed TISAX (Trusted Information
+Security Assessment Exchange) certification. This sends out a
+strong signal about cross-company information and data
+security. TISAX certification is an assessment method devel-
+Safeguarding data and information throughout the Volks-
+wagen Group worldwide is one of the main tasks of IT and
+was continued in fiscal year 2021 with the Group Information
+Security Program. The objective of the program is to create
+uniform processes and solutions across the Group to further
+enhance information security. The main focus is on topics
+that could one day pose information security risks for the
+Group and that need to be specially safeguarded as part of the
+Group's digital transformation strategy, including cloud
+security and secure software development. The program's
+content and orientation will be reviewed annually and
+updated if necessary.
+IT security
+We develop cross-brand software for digital ecosystems, for
+new and existing business processes in the Group in our
+software development centers. Cutting-edge technologies for
+the industrial Internet of Things are being developed at the
+Software Development Center in Dresden. In collaboration
+with a leading cloud provider, Amazon Web Services, we are
+refining the digital production platform already in use which
+aims to enable Volkswagen to reduce its production costs in
+the future.
+Software development
+take action at an early stage. Big data refers to data volumes
+that are too vast and too complex to be analyzed and
+evaluated using manual or conventional methods. Produc-
+tion processes are also safeguarded by artificial intelligence
+and camera systems (computer vision). The systems and
+equipment in the factories are linked together in an inte-
+grated overall system, enabling efficiency to be increased and
+digital pilot projects to be integrated into the existing archi-
+tecture much more easily than before. In conjunction with
+the different departments, Group IT is also contributing its
+expertise to the field of research and development. For
+instance, digitalized work tools such as the “virtual concept
+vehicle" make the product development process faster and
+more efficient. Value creation in sales is being increased with
+the help of advanced analytics (a process for systematic
+analysis of future events and behavior), for example in
+optimizing the use of parking lots and vehicle collection
+processes.
+The further convergence of different business areas with
+IT is also opening up potential. In production, for example,
+big data processes help us to analyze faulty machinery and
+In addition, the SICS are used to transfer knowledge
+throughout the entire Company on topics such as data ana-
+lytics (process for the systematic analysis of data in electronic
+form) and decentralized databases, which allow network
+participants to jointly process and store data (distributed
+ledger technologies), and to make new technologies usable
+for the Company. For instance, numerous bot projects are
+being implemented to automate business processes (robotic
+process automation).
+Volkswagen embraces digitalization in the Company; its
+in-house software innovation centers (SIC, formerly IT Labs)
+are just one example of this. They act as centers of innovation
+and expertise that conduct research, pilot new technologies
+and develop these in areas relevant for the Company and
+make these available for productive use in applications for
+the organization. Here, Group IT, research institutes, edu-
+cational institutions (such as universities), technology
+partners and policy-makers work closely together on future
+trends in information technology. At the same time, the SICS
+function as liaison offices for start-ups. This allows the
+experience and strategic expertise of a large company like
+Volkswagen to be combined with the pragmatism, the ideas
+for new areas of business and the speed of young start-ups.
+Highly specialized experts at the SICS in Munich, and
+increasingly also in Wolfsburg, are working, for example, on
+exploiting the potential of quantum computers for areas that
+have a commercial application. The focus here is on the
+optimization of traffic flows, the data-driven management,
+pricing and optimization of spare parts in the after-sales
+business, and smart management of energy use to generate
+sustainable savings using artificial intelligence methods (for
+example in the compressed air control systems used at the
+Wolfsburg plant to reduce CO2 emissions). Initial experi-
+mental projects are also investigating opportunities for com-
+bining the potential of quantum computers with self-
+learning systems (quantum machine learning).
+165
+The Group IT Steering Committee was formed in 2019 to
+leverage synergies, to manage the Group's IT project portfolio
+and promote communication with departments on IT pro-
+jects. Planning and managing the IT project portfolio at
+Group level ensures that resources are employed in a coordi-
+nated fashion in the development, implementation and use
+of IT solutions. Particular emphasis is placed on IT projects
+aimed at digitalizing business processes across departments.
+Group Management Report
+Sustainable Value Enhancement
+164
+Due to the global spread of the Covid-19 pandemic, we
+took extended measures to protect the workforce, such as an
+increased use of remote working, similar to in the previous
+year. In this context, safeguarding access to the IT infrastruc-
+ture in all brands and companies was a major priority again
+in fiscal year 2021. The use of digital applications to promote
+more efficient forms of digital collaboration and more
+effective options for applying these within the Company
+increased once again compared to the prior year. For exam-
+ple, the Company's internal network, Group Wiki, promotes
+knowledge transfer and networking among all employees.
+The platform puts the user in touch with one another across
+the brands and the world. The provision of state-of-the-art IT
+applications for digital collaboration and the expansion of
+options for conducting business on mobile devices are
+designed to improve productivity in the long term. Building
+on the rollout of Microsoft 365, the first steps in imple-
+menting the Microsoft Power Platform were taken in 2021.
+The software environment allows employees without pro-
+gramming skills to automate individual work processes in
+the Office context, such as the filing of e-mail attachments.
+To safeguard the development of core competencies in
+our Company in the fields of technology, digitalization and
+autonomous driving, we are building up IT resources that will
+help shape and push the Company's digital transformation.
+Volkswagen is working hard on strengthening its digital
+competencies with a view to shaping and safeguarding the
+Company's future viability. To this end, we are continuously
+upgrading our IT systems so that they are sustainable in the
+long term and are progressively moving our systems and
+applications over to new cloud platforms. Our primary con-
+cern is further increasing the efficiency of the IT systems
+used throughout the Company and standardizing these as far
+as possible. We are also concentrating on building up our
+expertise and specialist IT knowledge, especially in key digital
+technologies such as artificial intelligence and the use of new
+IT technologies in products, services and business processes.
+INFORMATION TECHNOLOGY (IT)
+In addition, we also encourage employee involvement by
+means of Idea Management. Employees have the opportunity
+to put their creativity and knowledge to use by contributing
+their ideas for making improvements, thus contributing to
+streamlining workflows, further enhancing ergonomics in
+the workplace, reducing costs and continuously increasing
+efficiency. The system also provides monetary incentives by
+offering set rewards.
+By means of the opinion survey (Stimmungsbarometer),
+the Company regularly gathers information regarding
+employee satisfaction and also surveys employees on our
+corporate culture. Based on the results, follow-up processes
+are implemented in which measures are developed and
+executed. The 2021 opinion survey covered 165 companies in
+40 countries. Of the 596,905 employees in the companies
+surveyed, 466,021 participated. This was a participation rate
+of 78%. The sentiment rating calculated from 22 questions is
+the main parameter of the opinion survey and is used to help
+determine Board of Management remuneration, among
+other things. It is calculated from the total of all the related
+answers in the survey and, in 2021, stood at 82.3 out of a
+possible total of 100 index points. The score achieved in 2021
+was thus just above the previous year's figure, which
+amounted to 82.2 points.
+Employee participation in the Company's success through
+the issuance of treasury shares in the form of an employee
+share program is not currently offered.
+We brief our employees extensively on upcoming changes
+so as to involve them in strategic decision-making as early as
+possible. When shaping labor relations to embody cooper-
+ation and social peace, we are guided by universal human
+rights and the standards of the International Labour Organi-
+zation (ILO). Building on these principles, we have agreed
+various charters and declarations with the European and the
+Global Works Councils which set out the principles of labor
+policy in the Volkswagen Group as well as employee rights.
+Use of IT solutions and digitalization
+Employee participation
+oped by the German Association of the Automotive Industry
+and is based on the international industry standard and the
+requirements of the automotive world. The aim is for
+sensitive data and information to be dealt with securely by
+our suppliers.
+The tasks of automotive cybersecurity are to avert cyber
+attacks on our vehicles throughout the entire product life
+cycle and in the supply chains and to protect our customers'
+personal data in our vehicles. The Group policies in the Volks-
+wagen Group based on the legal requirements of the UNECE
+regulation have been implemented. Cross-brand organi-
+zational guidelines are being specified and implemented on
+this basis, taking the organizational circumstances into
+account.
+Our declared aim is to comply with legal and regulatory
+requirements. Furthermore, we are guided by company
+standards and targets. The intention of our environmental
+compliance management systems is to ensure that environ-
+mental aspects and obligations are taken into account in our
+business operations. Disregard for the rules is treated as a
+severe compliance violation, as are fraud and misconduct.
+Compliance with our Environmental Policy Statement and
+with other Group environmental requirements is evaluated
+annually and reported to the Board of Management of Volks-
+wagen AG, the respective boards of management of the
+brands or the managing directors of the companies.
+The Volkswagen Group coordinates the activities of the
+brands, which in turn steer the measures in the regions. The
+brands and companies are responsible for their own environ-
+mental organization. They base their own environmental
+protection activities on the targets, guidelines and principles
+that apply throughout the Group.
+Committee.
+mittee, the Group Steering Committee for Fleet Compliance
+and Exhaust Gas, and the Group Sustainability Steering
+The Board of Management of Volkswagen AG is the
+highest internal decision-making body for environmental
+issues. Both it and the brands' boards of management take
+business, social and environmental criteria into account
+when making key company decisions. The Group-wide man-
+agement of environmental protection is the responsibility of
+the Group Steering Committee for the Environment and
+Energy. Other bodies take responsibility for steering key indi-
+vidual aspects. They include the Group CO2 Steering Com-
+ment.
+Organization of environmental protection
+Volkswagen has created an environmental policy that sets out
+guidelines for environmental decision-making, for the man-
+agement of projects and for the Group's environmental
+stewardship. Thus, parameters are set for the conduct and
+working methods of management and staff in five areas:
+management behavior, compliance, environmental protec-
+tion, collaboration with stakeholders and continuous improve-
+producing brands in the regions of Europe (EU27, United
+Kingdom, Norway and Iceland), China and the USA over the
+entire life cycle. In this index, the use phase is calculated
+over 200,000 km and with reference to region-specific fleet
+values without statutory flexibilities. The CO2e intensity of
+the charging current of the electric vehicles is also calcu-
+lated based on region-specific electricity mixes. Our vehicle
+life cycle assessments, which are used as the data basis for
+calculating supply chain and recycling emissions, have
+been verified externally and independently in accordance
+with ISO 14040. The DKI gives us an informative measuring
+tool that makes our progress and interim results public and
+verifiable. The DKI calculation methodology is regularly
+adapted according to internal and external requirements,
+such as new test cycles for fleet emissions. Published DKI
+values can therefore also be adjusted to the new method-
+ology and thus changed to facilitate the presentation of a
+time series that is methodologically consistent. In 2021, the
+methodology was adjusted to the WLTP test cycle for fleet
+emissions. By 2030, the DKI is to be reduced by 30% com-
+pared with the base year 2018 (NEDC), and emissions
+offsetting will not be included in the figure. In the
+reporting year, the DKI value averaged 45.9 t CO₂e/vehicle.
+This represents a reduction of 1.7 t CO2e/vehicle compared
+with the WLTP-adjusted figure for 2020.
+Group Management Report
+Sustainable Value Enhancement
+166
+CAR2X technology offers our customers protection by
+warning them, for example, of traffic hazards. CAR2X tech-
+nology enables direct wireless communication from vehicle
+to vehicle and from the vehicle to the transport infra-
+structure. This TÜV IT-certified technology, implemented in
+accordance with European standards, represents a technical
+milestone in our CAR2X program.
+> the decarbonization index (DKI). The DKI measures the
+emissions of CO2 and CO2 equivalents (jointly referred to as
+CO2e) by the passenger car- and light commercial vehicle-
+> Environmental compliance. Where integrity is concerned,
+we aim to become a role model for a modern, transparent
+and successful enterprise by taking into account the
+environmental impact of our mobility solutions over all
+stages of the life cycle. To this end, we use effective manage-
+ment systems, the effectiveness of which is monitored
+regularly.
+> Air quality. We are driving e-mobility forward with the
+intention of improving the local air quality.
+> Resources. We intend to reduce production-related environ-
+mental impact, maximize our resource efficiency and
+promote circular economy approaches in the areas of
+materials, energy and water.
+> Climate change. We are committed to the Paris Climate
+Agreement, which aims to keep the increase in global
+temperature by 2050 to well below two degrees Celsius. 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. In addition,
+the Company has set a target of a 30% reduction by 2030
+compared with 2018, not including emissions offsetting.
+This decarbonization target has been validated by the
+Science Based Targets Initiative. We use the decarboni-
+zation index to document our progress. We intend to
+become a net-carbon-neutral company by 2050.
+Our focus is on four prioritized action areas:
+As one of the largest automobile manufacturers, Volkswagen
+takes responsibility for the environmental impact of its
+activities. Based on the new Group strategy NEW AUTO,
+we have put further focus on our ambitious environmental
+targets. With our environmental mission statement
+goTOzero, we aspire to minimize environmental impact
+along the entire life cycle – from raw material extraction until
+end-of-life for all our products and mobility solutions in
+order to keep ecosystems intact and to exert a positive influ-
+ence on society. Compliance with environmental regulations,
+standards and voluntary commitments is a basic prerequisite
+of our actions.
+ENVIRONMENTAL STRATEGY
+high level of attention if ongoing compliance with data pro-
+tection requirements is to be ensured. Continuously raising
+awareness among the workforce and further standardizing
+and automating processes remain the focus of activities.
+Going forward, compliance requirements will be already built
+into the design of IT solutions and infrastructure decisions.
+Other key milestones in fiscal year 2021 were the suc-
+cessful completion of the central GDPR (General Data Pro-
+tection Regulation) project and the associated integration
+into standard operation. This project gave rise to uniform
+processes and procedures for GDPR compliance. The
+introduction of the data protection management system and
+the data protection management organization has thus
+established the infrastructure for implementing and
+complying with data protection requirements at Volks-
+wagen AG. Increasing digitalization and interconnectedness
+of business processes, new planned legislation with data
+protection relevance and the sharp rise in the extent of
+international data protection legislation continue to require a
+Key central information security processes have been
+audited within the international ISO 27001 framework and
+were recertified in 2021. This is the most important standard
+for information security and extends beyond IT to also cover
+issues such as human resource security, compliance, physical
+security and legal requirements.
+The "Protected Customer" program addresses the require-
+ments of the UNECE regulation. To enable us to protect our
+customers against cyber attacks, and to implement our
+solutions in conformity with national and international
+legislation, we are establishing integrated, cross-brand, cross-
+regional security management systems for information and
+cybersecurity. These were confirmed with UNECE CSMS
+certification in 2021. Safeguarding of the complete life cycle
+of our vehicles and the digital mobility services was trans-
+ferred to the responsible line organizations after the program
+ended in 2021 and continues to be performed there.
+We have defined a strategic indicator that aligns with our
+existing and future strategic direction:
+ECONOMIC ACTIVITIES OF THE VOLKSWAGEN GROUP
+> Competent and dedicated employees strive for excellence
+in terms of innovation, added value and customer focus.
+> A forward-looking work organization ensures optimal
+working conditions in factories and offices.
+human resources policy
+Group Management Report
+Sustainable Value Enhancement
+159
+672,789 people, which includes the Chinese joint ventures.
+This figure represents a 1.5% increase compared with the end
+of 2020. The ratio of Group employees in Germany to those
+abroad remained largely stable over the past year; at the end
+of 2021, 43.9 (44.4)% of the workforce worked in Germany.
+Human resources strategy and principles of the
+The 2021 reporting period saw the Volkswagen Group adopt
+the new “Transform to Tech” human resources strategy that
+builds on the "Empower to transform” functional area stra-
+tegy and takes up the objectives of the new Group strategy
+NEW AUTO and its People & Transformation base initiative.
+With its new human resources strategy, the Volkswagen
+Group is also continuing with key approaches in its human
+resources policy. These include the pronounced stakeholder
+focus in corporate governance, comprehensive participation
+rights for employees, comprehensive training opportunities,
+the principle of long-term service through systematic
+employee retention and remuneration that is fair and
+transparent. Throughout the Group, we offer individual
+remuneration components for employees not covered by
+collective agreements that we continuously update to reflect
+new working realities and business models.
+This is why "Transform to Tech" looks at employees and
+their needs throughout the entire work experience: "Me"
+(Me@Volkswagen), “My team” (Teams@Volkswagen), "All of
+us at Volkswagen" (All of us@Volkswagen) and "Volkswagen
+in society" (We@Volkswagen and the world around us) are
+the perspectives from which we address employees' needs
+and expectations in a holistic manner. Together, these four
+dimensions make up the work experience, job satisfaction
+and, ultimately, the success of the work and the Group's
+integration into society.
+At the same time, the new human resources strategy is
+setting innovative trends. Employee experience is to be
+considered systematically, the teams strengthened as the
+most important units in the company's organization, and
+modern forms of working, such as agile methods, are to be
+developed. However, our main aim is to improve the
+individual experience of employees in order to become more
+attractive as an employer and take the performance of our
+organization to the next level.
+> The "Teams@Volkswagen" dimension is pivotal to the
+Group's success: high-performance teams in the Volks-
+EMPLOYEES BY MARKET
+in percent, as of December 31, 2021
+о
+Europe (excluding Germany)/ 30%
+Other Markets
+Germany 44%
+> The first dimension, “Me@Volkswagen”, follows the prin-
+ciple that every employee should have the best possible
+conditions in which to do their job. Starting with avail-
+ability of first-class work equipment and tools, this also
+entails avoidance of red tape and overly complex process
+steps and includes state-of-the-art workspaces, oppor-
+tunities for 360° feedback, individual health coaching, and
+training opportunities tailored to the individual.
+WITH
+MINIMUM
+SAFEGUARDS
+€ million
+%1
+€ million
+%1
+TAXONOMY-ALIGNED
+OPERATING
+EXPENDITURES
+WITH
+DNSH
+CRITERIA
+TRENDS IN THE MARKETS FOR COMMERCIAL VEHICLES
+OPERATING EXPENDITURE
+CLIMATE CHANGE
+Y/N
+COMPLIANCE COMPLIANCE
+SUBSTANTIAL
+CONTRIBUTION TO
+9.1 Close to market research,
+MITIGATION
+Y/N
+32.7
+%1
+Y
+Y/N
+34.7
+3,463
+97.1
+9,702
+€ million
+technologies
+Y
+Y/N
+34.7
+3,463
+99.2
+9,911
+3,265
+3.6 Manufacture of other low-carbon
+Taxonomy-eligible operating expenditure in the Power
+Engineering Business Area falls under economic activity 3.6
+Manufacture of other low-carbon technologies. As with capi-
+tal expenditure, operating expenditure was broken down on
+the basis of planned sales revenue.
+Power Engineering
+production and use of hydrogen
+3.6 Manufacture of other low-carbon
+technologies
+65
+0.1
+9.1 Close to market research,
+development and innovation
+B. Taxonomy-non-eligible activities
+Total (A + B)
+443
+0.8
+54,039
+1 All percentages relate to the Group's total capital expenditure.
+Y
+3,760
+7.0
+Group Management Report
+technologies for transport
+3.3 Manufacture of low-carbon
+Vehicle-related business
+A. Taxonomy-eligible activities
+Economic activities
+OPERATING EXPENDITURE
+3.2 Manufacture of equipment for the
+production and use of hydrogen
+3,265
+All operating expenditure attributable to the vehicle-
+related business is associated with economic activity 3.3
+Manufacture of low-carbon technologies for transport and
+has been classified as taxonomy-eligible.
+The allocation of operating expenditure to the economic
+activities followed the same logic as that described for capital
+expenditure.
+The operating expenditure reported by us for the purposes of
+the EU taxonomy comprises non-capitalized research and
+development costs, which can be taken from note 12 "Intan-
+gible assets". We also include the expenditure for short-term
+leases recognised in our consolidated financial statements,
+which can be found in note 33 "IFRS 16 (Leases)", and expen-
+diture for maintenance and repairs.
+Operating expenditure
+175
+EU Taxonomy
+Where possible, non-capitalized research and development
+costs were directly attributed to vehicles. It was included, if
+the vehicles in question make a substantial contribution to
+the climate change mitigation objective. We did not include
+any non-capitalized research and development costs directly
+attributable to vehicles that do not meet the screening cri-
+teria. Non-capitalized research and development costs that
+were not clearly attributable to a particular vehicle were taken
+into account on a proportionate basis using allocation
+formulas. For these and other operating expenses, the same
+allocation formulas were used as for capital expenditure.
+32.7
+209
+2.1
+For 2022, we expect a significantly positive development
+in new registrations for mid-sized and heavy trucks with a
+gross weight of more than six tonnes compared with the
+previous year, with variations from region to region, in the
+markets that are relevant for the Volkswagen Group.
+Since July 1, 2021, Navistar has been a TRATON GROUP brand,
+making it part of the Volkswagen Group's Commercial Vehi-
+cles Business Area. This has broadened the relevant markets
+in the commercial vehicles business, both for trucks and for
+the school bus segment, which expanded to include North
+America (consisting of USA, Canada and Mexico).
+The volume of new registrations for light commercial
+vehicles in 2022 will probably be slightly higher than the
+previous year's figure. We are expecting demand in the
+Chinese market to be on a level with the prior year. For India,
+we are forecasting a distinctly higher volume in 2022 than in
+the reporting period. In the Japanese market, we estimate
+that volumes will be slightly up year-on-year.
+The passenger car markets in the Asia-Pacific region are
+expected to be slightly up on the prior-year level in 2022. We
+estimate that the market volume in China will also be slightly
+higher than the comparative figure for 2021. Attractively
+priced entry-level models in the SUV segment in particular
+should still see strong demand. As long as there is no
+resolution in sight, the trade dispute between China and the
+United States is likely to continue to weigh on business and
+consumer confidence. We anticipate that the Indian market
+will perform at the previous year's level. Japan should see
+distinct growth in market volume in 2022.
+Asia-Pacific
+Owing to their dependence on demand for raw materials
+worldwide, the South American markets for passenger cars
+and light commercial vehicles are heavily influenced by
+developments in the global economy. We anticipate a distinct
+increase overall in new registrations in the South American
+markets in 2022 compared with the previous year. The market
+volume in Brazil is also expected to grow distinctly compared
+with 2021. We anticipate that the volume of new registrations
+in Argentina will also be distinctly higher year-on-year.
+South America
+highest for models in the SUV and pickup segments. In
+Canada, the number of new registrations is projected to be
+moderately higher than the previous year's level. For Mexico
+we also expect a moderate increase in new registrations com-
+pared with the reporting period.
+Noticeable market growth is expected for the 27 EU
+countries excluding Malta, but plus the United Kingdom,
+Group Management Report
+178
+The sales volume in the markets for passenger cars and light
+commercial vehicles (up to 6.35 tonnes) in North America as
+a whole and in the USA in 2022 is likely to be slightly higher
+than the previous year's level. Demand will probably remain
+North America
+We also anticipate that the number of registrations of
+light commercial vehicles will be moderately up on the pre-
+vious year.
+In the German passenger car market, we expect the volume of
+new registrations in 2022 to distinctly exceed the prior-year
+figure.
+Germany
+The volume of new registrations for light commercial
+vehicles in 2022 is expected to be significantly higher in
+Turkey and moderately higher in South Africa compared with
+the respective prior-year figure.
+The volume of new registrations for passenger cars in
+Turkey in 2022 is projected to be significantly above the
+previous year's level. In South Africa, the market volume in
+2022 is likely to be up moderately year-on-year.
+Report on Expected Developments
+-
+Norway and Switzerland (EU27+3) because it has so far not
+been possible to fully satisfy the high demand for trucks due
+to existing supply bottlenecks. We anticipate that Turkey will
+witness a distinct rebound in demand and there will be a
+moderate increase in demand in South Africa. The truck
+market in North America is divided into weight classes 1 to 8.
+We expect a profound increase in new registrations in the
+segments relevant for Volkswagen - Class 6 to 8 (8.85 tonnes
+or heavier). We estimate that demand in Brazil will be notice-
+ably higher than in the previous year.
+A significant increase in overall demand, with regional
+variations, is expected for 2022 in the bus markets relevant
+for the Volkswagen Group. We anticipate slight year-on-year
+market growth in the EU27+3 countries. Here, we are
+assuming that the coach segment will start to recover and
+that we will receive orders in the context of government-
+funded programs. We expect significant growth in North
+America. New registrations in Brazil are anticipated to be
+substantially higher than the prior-year figure.
+169
+Economic activities in vehicle-related business
+Economic activity 3.3 Manufacture of low-carbon technologies for transport
+We allocate all activities in our vehicle-related business
+associated with the development, production, sale (including
+financial services), operation and servicing of vehicles to this
+economic activity. This includes all passenger cars, light
+commercial vehicles, trucks, buses and motorcycles manufac-
+tured by us, irrespective of their powertrain technology, and
+also includes genuine parts.
+In our vehicle-related business, we have detailed the
+vehicles manufactured by us by model and powertrain tech-
+nology and analyzed the CO2 emissions associated with them
+in accordance with the WLTP. In this way, we have identified
+those vehicles among all of our taxonomy-eligible vehicles
+that meet the screening criteria and with which the sub-
+stantial contribution to climate change mitigation is mea-
+sured. These include all of the Volkswagen Group's all-electric
+vehicles. Until December 31, 2025, they also include passen-
+ger cars and light commercial vehicles with CO2 emissions of
+less than 50 g/km. This encompasses the majority of our
+plug-in hybrids. Buses meeting the EURO VI standard (Stage
+E) are also included until December 31, 2022.
+At this stage, other activities that are directly associated
+with the primary vehicle-related business and that in our
+view should also be allocated to this economic activity have
+not yet been included or have been interpreted as not yet
+being taxonomy-eligible. This is because, as the rules of the
+EU taxonomy currently stand, it is still unclear where to
+record them in accordance with the EU taxonomy. These
+activities particularly include the sale of engines and power-
+trains, as well as parts deliveries, the sale of non-Group prod-
+ucts and production under license by third parties. Hedging
+transactions and individual activities that we present
+primarily under Other sales revenue in the consolidated
+financial statements do not conform to the descriptions of
+economic activities in the EU taxonomy, and we have
+therefore initially classified them as not being taxonomy-
+eligible.
+Economic activities in Power Engineering
+In the Power Engineering Business Area, we have analyzed
+our activities with respect to their classification under the EU
+taxonomy and, with the exception of the heavy fuel oil
+engine new building business and individual components for
+the extraction and processing of fossil fuels, have identified
+them as taxonomy-eligible.
+Economic activity 3.2 Manufacture of equipment for the production and use
+of hydrogen
+On average, we anticipate slight growth rates in the
+relevant truck markets for the years 2023 to 2026.
+Our activities relating to the manufacture of equipment for
+the production and use of hydrogen that meet the screening
+criteria and make a substantial contribution to the climate
+change objective are taxonomy-eligible. One example is the
+use of green hydrogen. At Volkswagen, these include the
+power-to-X technology for the production of low-carbon or
+carbon-neutral synthetic fuels, as well as components for the
+storage of hydrogen.
+Economic activity 9.1 Close to market research, development and innovation
+The description of this economic activity includes applied
+research in technologies for the reduction or avoidance of
+greenhouse gas emissions. We allocate our licensing business
+to this economic activity. This business provides our devel-
+opment services in the form of production documents, based
+on which our licensees are authorized to manufacture
+corresponding gas and/or dual-fuel engines.
+For economic activity 3.2 Manufacture of equipment for the
+production and use of hydrogen, we meet the screening
+criteria that are a requirement for the substantial contri-
+bution to the climate change mitigation objective. Given that
+the new reporting obligations and the requirements specified
+therein have only very recently been introduced, it was not
+yet possible to provide corresponding proof of economic
+activities covered by 3.6 Manufacture of other low-carbon
+technologies and 9.1 Close to market research, development
+and innovation.
+170
+EU Taxonomy
+The 2022 market volume for merchant shipping is
+expected to dip below the level of the reporting year. Despite
+an expected higher volume of sea trade, combined with calls
+for high energy efficiency and low pollutant emissions, the
+market is anticipated to be slightly below the prior-year level
+due to high order figures in 2021 and the associated shipyard
+capacity utilization. By contrast, the market areas excluding
+merchant shipping are expected to reach a slightly higher
+level than in 2021. Following the recommencement of
+international travel, demand for cruise ships is forecast to
+improve slightly from the low level of the reporting year. The
+passenger ferry market is also expected to grow slightly. We
+are anticipating stable demand for government vessels. In the
+offshore sector, new order volumes for special applications
+such as offshore wind look set to be on the low side due to
+continued overcapacity. Overall, we expect the marine market
+to be at a slightly lower level than that seen in the reporting
+year with competitive pressure continuing.
+In the Power Engineering segment, we expect the market
+environment to remain difficult in 2022. The course of the
+Covid-19 pandemic thus far and its consequences are
+resulting in continued uncertainty.
+TRENDS IN THE MARKETS FOR POWER ENGINEERING
+Overall, we expect a moderate increase in the demand for
+buses in the relevant markets for the period from 2023 to
+2026.
+Economic activity 3.6 Manufacture of other low-carbon technologies
+The description of this economic activity means that only
+those technologies manufactured for the purpose of reducing
+greenhouse gas emissions substantially in other sectors of
+the economy are taxonomy-eligible. At Volkswagen, this com-
+prises all new-build activities that enable the use of gas and
+climate-neutral synthetic fuels (e.g. manufacturing of gas and
+dual-fuel engines), all industrial solutions for energy storage
+and sector coupling (e.g. heat pumps) and all solutions for
+carbon capture, storage and usage; it also includes subsea
+compression (subsea compression close to the wellhead for
+the extraction of natural gas). These activities are rounded off
+by the service and after-sales business, comprising the
+upgrading and modernization of existing equipment. For
+example, we retrofit existing maritime fleets with technology
+that makes it possible to reduce CO2 emissions.
+Sales of passenger cars in 2022 are expected to distinctly
+exceed the prior-year figures in markets in Central and Eastern
+Europe – subject to the further development of the Russia-
+Ukraine conflict. In the region's other markets, a slight to sig-
+nificant rise in the number of new registrations is expected.
+Registrations of light commercial vehicles in 2022 are
+expected to slightly exceed the prior-year figures in markets
+in Central and Eastern Europe subject to the further
+development of the Russia-Ukraine conflict.
+For light commercial vehicles, we expect the volume of
+new registrations in Western Europe in 2022 to be moderately
+up on the previous year's level despite the possible impact of
+the pandemic, continuing supply bottlenecks for semicon-
+ductors and the still uncertain consequences of the United
+Kingdom's exit from the EU. We predict a moderate to
+noticeable increase in the United Kingdom, Spain and France
+and a slight decline in Italy.
+the possible impact of the pandemic and the still uncertain
+consequences of the United Kingdom's exit from the EU may
+result in ongoing uncertainty among consumers and dampen
+demand. Limited vehicle availability as a result of the semi-
+conductor shortage may also continue to weigh on the
+volume of new registrations. Nevertheless, we assume a sig-
+nificant increase for the United Kingdom and Spain in 2022.
+In France and Italy, there will probably be a slight or moderate
+increase respectively in the volume of new registrations
+compared to the reporting period.
+momentum.
+Our planning is based on the assumption that global
+economic output will continue to grow in 2022, albeit at a
+somewhat lower level overall, after the recovery observed in
+the past fiscal year – provided that the Covid-19 pandemic
+does not flare up again and that shortages of intermediates
+and commodities become less intense. We continue to
+believe that risks will arise from protectionist tendencies,
+turbulence in the financial markets and structural deficits in
+individual countries. In addition, growth prospects will be
+negatively impacted by ongoing geopolitical tensions and
+conflicts, with risks arising especially from the Russia-
+Ukraine conflict. We assume that both the advanced econ-
+omies and the emerging markets will experience positive
+-
+DEVELOPMENTS IN THE GLOBAL ECONOMY
+Our assumptions are based on current estimates by third-
+party institutions. These include economic research inst-
+itutes, banks, multinational organizations and consulting
+firms.
+In the following, we describe the expected development of
+the Volkswagen Group and the general framework for its
+business activities. Risks and opportunities that could
+represent a departure from the forecast trends are presented
+in the Report on Risks and Opportunities.
+The global economy is expected to continue growing overall in 2022, albeit at a somewhat
+lower level. Global demand for passenger cars will probably vary from region to region
+and increase moderately year-on-year. With our brand diversity, broad product range, technologies
+and services, we believe we are well prepared for the future challenges in the mobility business.
+Report on Expected Developments
+Furthermore, we are forecasting that the global economy
+will also continue to grow in the period from 2023 to 2026.
+Group Management Report
+176
+1 All percentages relate to the Group's total operating expenditure.
+9,992
+0.8
+81
+Total (A + B)
+B. Taxonomy-non-eligible activities
+development and innovation
+Report on Expected Developments
+Europe/Other Markets
+In Western Europe, we expect comparatively robust economic
+growth, exceeding the 2019 pre-crisis level. The widespread
+impact of the Covid-19 pandemic and the uncertain conse-
+quences of the United Kingdom's exit from the EU will
+fundamentally pose major challenges.
+For 2022, we anticipate that the volume of new passenger car
+registrations in Western Europe will be distinctly above that
+recorded in the reporting period. At the same time, however,
+Europe/Other Markets
+We believe we are well prepared overall for the future
+challenges pertaining to automotive business activities and
+for the mixed development of the regional automotive
+markets. Our brand diversity, our presence in all major world
+markets, our broad and selectively expanded product range,
+and our technologies and services put us in a good com-
+petitive position worldwide. With electric drives, digital con-
+nectivity and autonomous driving, we want to make the
+automobile cleaner, quieter, more intelligent and safer. We
+have set ourselves the goal of continuing to excite our
+customers in the future and meeting their diverse needs with
+an appealing product portfolio of impressive vehicles and
+forward-looking, tailor-made mobility solutions.
+Trends in the markets for light commercial vehicles in the
+individual regions will also be mixed; on the whole, we
+anticipate a slight increase in the sales volume for 2022. This
+assumes that the Covid-19 pandemic does not flare up again
+and that shortages of intermediates, especially semicon-
+ductors, and commodities become less intense. For the years
+2023 to 2026, we expect demand for light commercial vehi-
+cles to increase globally.
+We predict that trends in the markets for passenger cars in
+the individual regions will be mixed in 2022. Overall, the
+global volume of new vehicle sales is expected to be moder-
+ately up on the prior year without reaching the pre-pandemic
+level. This prediction assumes that the Covid-19 pandemic
+does not flare up again and that shortages of intermediates,
+especially semiconductors, and commodities become less
+intense. We are forecasting growing demand for passenger
+cars worldwide in the period from 2023 to 2026.
+TRENDS IN THE MARKETS FOR PASSENGER CARS AND
+LIGHT COMMERCIAL VEHICLES
+The Chinese economy will probably continue growing at a
+relatively high level in 2022. We also expect a relatively high
+rate of expansion for the Indian economy in 2022. A robust
+rise in economic output is anticipated in Japan.
+Asia-Pacific
+In all probability, the Brazilian economy will record a moder-
+ately positive rate of growth in 2022. The economic situation
+in Argentina is likely to improve slightly amid continued very
+high inflation and depreciation of the local currency.
+South America
+Report on Expected Developments 177
+Group Management Report
+We anticipate comparatively high economic growth in the
+USA in 2022 with a continued recovery of the labor market
+situation. The US Federal Reserve expects interest rates to rise
+in the course of the year, albeit at a relatively low level.
+Further inflationary trends and developments in the labor
+market will play a key role as decisive factors for possible
+adjustments to the key interest rate. Economic growth in
+Canada is also likely to be significantly positive, compara-
+tively speaking, while growth in Mexico is expected to be
+moderate.
+North America
+We expect gross domestic product (GDP) in Germany to grow
+at a significantly positive pace in 2022, comparatively speaking,
+exceeding the 2019 pre-crisis level. The labor market situ-
+ation is likely to improve further in 2022.
+Germany
+For Turkey we expect markedly positive, albeit slower
+growth than in the reporting period given high inflation and
+a weak local currency. The South African economy will
+probably be dominated by political uncertainty and social
+tensions again in 2022 resulting from high unemployment,
+among other factors. Here we anticipate only moderate
+growth.
+-
+We likewise anticipate relatively robust growth rates in
+Central Europe in 2022. Economic output in Eastern Europe is
+also expected to continue growing - subject to the further
+development of the Russia-Ukraine conflict
+though at a
+somewhat slower pace, similar to the Russian economy.
+3.2 Manufacture of equipment for the
+Power Engineering
+commercial vehicles)
+(passenger cars and light
+Y/N
+8.5
+21,268
+91.0
+227,787
+%1
+€ million
+Y/N
+21,152
+Y/N
+€ million
+%1
+€ million
+SALES REVENUE
+TAXONOMY-ALIGNED
+WITH
+MINIMUM
+SAFEGUARDS
+WITH
+DNSH
+CRITERIA
+MITIGATION
+%1
+SALES REVENUE
+8.5
+3.3 Manufacture of low-carbon
+5
+3.6 Manufacture of other low-carbon
+3.2 Manufacture of equipment for the
+production and use of hydrogen
+Power Engineering
+5.8
+14,579
+commercial vehicles)
+(passenger cars and light
+Vehicle-related business
+of which taxonomy-aligned BEVS
+21,147
+Y
+Y/N
+8.5
+21,264
+90.1
+225,380
+technologies for transport
+8.5
+COMPLIANCE COMPLIANCE
+SUBSTANTIAL
+CONTRIBUTION TO
+CLIMATE CHANGE
+A. Taxonomy-eligible activities
+The DNSH criteria for this environmental objective require
+that the economic activity in question does not lead to
+substances listed in a variety of EU chemical regulations and
+directives being manufactured, placed on the market or used.
+Approval and monitoring processes are implemented with_bility are mandatory for fiscal year 2021. We have voluntarily
+the aim of ensuring compliance with the legislation specified
+in the DNSH criteria.
+The EU taxonomy defines sales revenue, capital expenditure
+and operating expenditure as the key performance indicators
+that must be reported on. Disclosures on taxonomy eligi-
+KEY PERFORMANCE INDICATORS IN ACCORDANCE WITH THE
+EU TAXONOMY REGULATION
+Pollution prevention and control
+171
+EU Taxonomy
+Group Management Report
+The product-related requirements for passenger cars and
+light commercial vehicles are reflected in the implemen-
+tation of the statutory end-of-life vehicle requirements in
+conjunction with the type approval of the vehicle models. In
+addition to this, each brand has targets and measures for the
+use of recycled materials in new vehicles.
+Protection and restoration of biodiversity and ecosystems
+Environmentally compatible waste management in the
+manufacturing process, reuse and use of secondary raw
+materials and a long product lifespan are a major part of
+Volkswagen's environmental management system. Volks-
+wagen defines clear and unambiguous guidelines on the
+circular economy in its environmental principles, in its
+overall factory white paper and in its goTOzero strategy.
+Sustainable use and protection of water and marine resources
+We evaluated our economic activities with respect to the
+sustainable use and protection of water and marine resources
+looking at the three following criteria: preserving water
+quality, avoiding water stress, and an environmental impact
+assessment (EIA) looking at the impact on water, or a similar
+process. We based the analysis primarily on ISO 14001
+certificates, the findings of official approval procedures and
+other external data sources in relation to regions exposed to
+increased risks.
+Volkswagen's climate-based DNSH assessment is based on
+Representative Concentration Pathway (RCP) scenario 8.5 to
+the
+year 2050 and thus assumes the highest concentration of
+CO2 according to the Intergovernmental Panel on Climate
+Change (IPCC). The relevance of the identified threats was
+assessed for the local environment and, if appropriate, the
+measures needed to mitigate the risk were developed.
+We performed a climate risk and vulnerability assessment to
+identify which production sites may be affected by physical
+climate risks. The physical climate risks we identified were
+assessed on the basis of the lifetime of the relevant fixed
+asset.
+Climate change adaptation
+Below, we set out our interpretation and describe the
+main analyses we used to examine whether there was any
+substantial harm to the other environmental objectives. The
+assessments confirm that we meet the requirements of the
+DNSH criteria in the reporting year for the sites producing
+passenger cars and light commercial vehicles. The outcome
+of the evaluation of the two Power Engineering sites was also
+positive.
+For the Power Engineering Business Area, an analysis was
+performed for each site that produces relevant components
+for systems or is responsible for supply chains that meet the
+screening criteria for the substantial contribution of eco-
+nomic activity 3.2 Manufacture of equipment for the produc-
+tion and use of hydrogen, or that are to meet them in future
+according to our five-year planning. There are two such sites,
+located in Germany and Sweden.
+In the vehicle-related business, an analysis was performed
+for each vehicle production site where passenger cars, light
+commercial vehicles, trucks and buses are or will be produced
+that meet the screening criteria for the substantial contribu-
+tion of economic activity 3.3 Manufacture of low-carbon
+technologies for transport, or that are to meet them in future
+according to our five-year planning. Of the approximately 30
+sites included, the majority are located in the EU, with some
+in the United Kingdom, Turkey, the USA, Mexico, Brazil and
+China.
+The DNSH criteria were analyzed in the reporting year for
+economic activities covered by 3.3 Manufacture of low-
+carbon technologies for transport and 3.2 Manufacture of
+equipment for the production and use of hydrogen.
+Transition to a circular economy
+In order to verify adherence to the requirements on bio-
+diversity and ecosystems, the relevant areas were identified.
+Where biodiversity-sensitive areas are located close to a
+production site, we checked whether a nature conservation
+assessment had been performed and whether nature conser-
+vation measures had been defined in the environmental
+approvals and subsequently implemented.
+MINIMUM SAFEGUARDS
+The minimum safeguards consist of the OECD Guidelines for
+Multinational Enterprises, the United Nations Guiding Prin-
+ciples on Business and Human Rights, the Fundamental
+Conventions of the International Labour Organisation (ILO)
+and the International Bill of Human Rights. Below, we
+describe the main analyses we used to examine whether the
+minimum safeguards are adhered to.
+Economic activities
+SALES REVENUE
+> €21.2 billion, or 8.5%, was taxonomy-aligned sales revenue.
+> €227.8 billion, or 91.0%, was taxonomy-eligible sales reve-
+nue and
+Of the Volkswagen Group's total sales revenue in fiscal year
+2021,
+In the Power Engineering Business Area, the majority of
+our taxonomy-eligible sales revenue was attributable to
+economic activity 3.6 Manufacture of other low-carbon tech-
+nologies (€2.4 billion). A further €13 million was contributed
+by economic activity 9.1 Close to market research, develop-
+ment and innovation. Our activities that fall under economic
+activity 3.2 Manufacture of equipment for the production
+and use of hydrogen recorded taxonomy-aligned sales reve-
+nue of €5 million, taking into account the DNSH criteria and
+minimum safeguards.
+passenger cars and light commercial vehicles, accounting for
+8.5% of consolidated sales revenue, was taxonomy-aligned. Of
+this amount, €14.6 billion, or 5.8% of consolidated sales
+revenue, was attributable to our all-electric models (BEVS).
+Taking into account the DNSH criteria and minimum
+safeguards, sales revenue of €21.1 billion attributable to our
+Of the taxonomy-eligible sales revenue, €21.3 billion
+meet the screening criteria used to measure the substantial
+contribution to climate change mitigation. This includes all
+of our all-electric vehicles, the majority of the plug-in hybrids,
+and the buses meeting the EURO VI standard (Stage E).
+Of this total, €225.4 billion, or 90.1% of Group sales, was
+attributable to economic activity 3.3 Manufacture of low-
+carbon technologies for transport and classified as taxon-
+omy-eligible. This includes sales revenue after sales allow-
+ances from new and used vehicles, including motorcycles,
+from genuine parts, from the rental and lease business, and
+from interest and similar income, as well as sales revenue
+directly related to vehicles, such as workshop and other ser-
+vices.
+The definition of turnover in the EU taxonomy corresponds
+to sales revenue as reported in the IFRS consolidated financial
+statements, which amounted to €250.2 billion in fiscal year
+2021 (see also note 1 "Sales revenue" in the notes to the con-
+solidated financial statements).
+Sales revenue
+Group Management Report
+EU Taxonomy
+172
+The financial figures relevant for the Volkswagen Group
+are based on the IFRS consolidated financial statements for
+fiscal year 2021. Where possible, the figures have been
+directly assigned to an economic activity. In our vehicle-
+related business, for example, we compiled the financial
+figures based on the vehicle model and powertrain technol-
+ogy. This applies both to the vehicles themselves and to the
+corresponding financial services and other services and
+activities. Only where this was not possible for capital expen-
+diture and operating expenditure, the figures were broken
+down using allocation formulas. In the vehicle-related busi-
+ness, we based the allocation formulas on the long-term sales
+plan and the capacity and utilization planning at the indi-
+vidual sites. In the Power Engineering Business Area, we used
+allocation formulas based on planned sales revenue. This
+data and planning form part of the medium-term financial
+planning for the next five years, on which the Board of Man-
+agement and Supervisory Board have passed a resolution.
+assessed our business activities for taxonomy alignment and
+already report the relevant figures for passenger cars and
+light commercial vehicles, and for our hydrogen activities in
+the Power Engineering Business Area.
+For the risks identified in the analysis, the companies
+received risk-specific measures to be implemented by the end
+of 2021.
+The Volkswagen Group has 120 production sites in 83
+countries, including those of the Chinese joint ventures. We
+conducted human rights risk assessments for 782 controlled
+Group companies worldwide; this included all sites that were
+also examined under the DNSH criteria.
+0.0
+EU Taxonomy
+00
+2,390
+Y
+Y/N
+26.7
+14,437
+99.2
+53,596
+%1
+€ million
+14,165
+Y/N
+%1
+€ million
+%1
+€ million
+CAPITAL EXPENDITURES
+TAXONOMY-ALIGNED
+WITH
+MINIMUM
+SAFEGUARDS
+WITH
+DNSH
+CRITERIA
+Y/N
+MITIGATION
+26.2
+technologies for transport
+and equipment for BEVS
+of which additions to property, plant
+6.5
+65
+3,504
+Y
+commercial vehicles)
+(passenger cars and light
+3.3 Manufacture of low-carbon
+development costs for BEVS
+26.2
+14,165
+Y
+Y/N
+26.7
+14,437
+99.1
+53,531
+of which additions to capitalized
+CAPITAL EXPENDITURE
+COMPLIANCE COMPLIANCE
+SUBSTANTIAL
+CONTRIBUTION TO
+CLIMATE CHANGE
+Group Management Report
+00
+0.0
+5
+I
+0.0
+5
+1 All percentages relate to the Group's total sales revenue.
+EU Taxonomy
+250,200
+9.0
+22,413
+B. Taxonomy-non-eligible activities
+0.0
+13
+development and innovation
+9.1 Close to market research,
+1.0
+Total (A + B)
+173
+Capital expenditure
+Capital expenditure for the purposes of the EU taxonomy
+refers to the following items in the IFRS consolidated finan-
+cial statements: additions to intangible assets, additions to
+property, plant and equipment, and additions to lease assets
+and investment property. These are reported in the notes to
+the 2021 consolidated financial statements in note 12 “Intan-
+gible assets", note 13 "Property, plant and equipment" and
+note 14 "Lease assets and investment property". Additions
+from business combinations, each of which is reported under
+"Changes in consolidated Group", are also included. By con-
+trast, additions to goodwill are not included in the calcu-
+lation.
+A. Taxonomy-eligible activities
+Vehicle-related business
+Economic activities
+CAPITAL EXPENDITURE
+> €14.2 billion, or 26.2%, was taxonomy-aligned capital expen-
+diture.
+> €53.6 billion, or 99.2%, was taxonomy-eligible capital expen-
+diture and
+Of the Volkswagen Group's total capital expenditure in fiscal
+year 2021,
+Capital expenditure was broken down based on planned sales
+revenue. Taxonomy-eligible capital expenditure amounted to
+€65 million.
+Taxonomy-eligible capital expenditure in the Power Engi-
+neering Business Area has been allocated to economic
+activity 3.6 Manufacture of other low-carbon technologies.
+Taking into account the DNSH criteria and minimum safe-
+guards, capital expenditure of €14.2 billion on our passenger
+cars and light commercial vehicles was taxonomy-aligned.
+This represented 26.2% of the Group's total capital expen-
+diture. This figure includes additions to capitalized develop-
+ment costs of €3.5 billion and additions to property, plant
+and equipment of €3.8 billion for our all-electric passenger
+cars and light commercial vehicles (BEVS).
+Group Management Report
+EU Taxonomy
+174
+To determine the substantial contribution in the vehicle-
+related business, we compiled the financial figures based on
+the vehicle model and powertrain technology, in the same
+way as for sales revenue. Where possible, capital expenditure
+was directly attributed to vehicles. It was included, if the
+vehicles in question make a substantial contribution to the
+climate change mitigation objective. We did not include any
+capital expenditure directly attributable to vehicles that do
+not meet the screening criteria. Capital expenditure that was
+not clearly attributable to a particular vehicle was taken into
+account on a proportionate basis using allocation formulas.
+In our vehicle-related business, we used model- and brand-
+specific allocation formulas based on the long-term sales
+plan and the capacity and utilization planning for the Group
+companies. Depending on the primary business activity,
+allocation formulas from the long-term sales plan were used
+for sales companies, for example, and allocation formulas
+based on the capacity and utilization planning were used for
+production companies. This means that capital expenditure
+on sites that according to our medium-term planning will
+only produce vehicles meeting the screening criteria for the
+substantial contribution in the next five years was counted in
+full via the allocation formula. In contrast, capital expen-
+diture on sites that only produce vehicles not meeting the
+screening criteria was not counted under the allocation
+formula. Calculated in this way, capital expenditure relating
+to vehicles that meet the screening criteria for the substantial
+contribution amounted to €14.4 billion.
+All capital expenditure attributable to our vehicle-related
+business is associated with economic activity 3.3 Manu-
+facture of low-carbon technologies for transport. Taxonomy-
+eligible capital expenditure for the vehicle-related business
+amounted to €53.5 billion, or 99.1% of the Group's capital
+expenditure.
+Additions from changes in the consolidated Group, which
+amounted to €5.1 billion in fiscal year 2021, can also be
+added to this figure. These mostly related to Navistar. Total
+capital expenditure to be included in accordance with the EU
+taxonomy therefore came to €54.0 billion.
+> €29.1 billion from lease assets (mainly vehicle leasing
+business) and investment property.
+> €10.7 billion from property, plant and equipment and
+> €9.1 billion from intangible assets,
+In fiscal year 2021, additions in the Volkswagen Group as
+defined above amounted to
+technologies
+Group Management Report
+Group Management Report
+DO NO SIGNIFICANT HARM (DNSH)
+We anticipate that, given the continuing challenging
+market conditions, deliveries to customers of the Volks-
+wagen Group in 2022 will be 5% to 10% up on the previous
+year. This assumes that the Covid-19 pandemic will not flare
+up again and that shortages of intermediates and com-
+modities will become less intense. The 2022 fiscal year will
+continue to be affected by shortfalls in supply due to the
+structural shortage of semiconductors. We anticipate that the
+supply of semiconductors will improve in the second half of
+the year, compared with the first half.
+NEW MODELS IN 2022
+The Volkswagen Passenger Cars brand will add the crossover
+derivative ID.5 to its ID. family in 2022. A locally produced
+version of this model tailored to the North American market
+will be available in this region. The successful T-Roc series will
+undergo extensive updating. In China, the next generation of
+the Lamando will be launched. The portfolio of vehicles with
+conventional powertrains, ranging from the Bora, Lavida and
+Sagitar saloons to the Tayron, Teramont and Viloran SUVS,
+will be comprehensively revamped. Product upgrades are also
+planned in South America in the Polo, Jetta and Virtus series.
+A local version of the Virtus will additionally be brought out
+in India for the first time.
+Audi's flagship A8 will be updated in 2022 and the R8
+series will get a rear-wheel drive derivative. The electrification
+campaign will be continued; in China, Audi will bring out a
+new vehicle based on the Modular Electric Drive Toolkit (MEB).
+The Q4 e-tron and e-tron GT models will also be launched in
+China. With the A7L, Audi will bring out the first vehicle
+produced together with new joint venture partner SAIC.
+The ŠKODA brand will expand its Enyaq series by adding a
+sporty top-of-the range model as well as a completely new
+crossover derivate. The Karoq will be updated. ŠKODA will
+also live up to its role as an important brand in growth mar-
+kets and will launch a new notchback saloon called the Slavia
+in India.
+Porsche will supplement its Taycan model range in 2022
+with a new body style. The 718 Cayman series will be rounded
+off with a sporty derivative. New derivatives will also be
+launched in the 911 family.
+Bentley will bring out a plug-in hybrid version of its new
+Flying Spur starting in 2022 and expand the Bentayga series.
+Lamborghini will top off the Aventador range with the
+Ultimae and also expand the range of the successful Urus.
+In 2022, Volkswagen Commercial Vehicles will launch the
+long-awaited ID. Buzz, a state-of-the-art all-electric vehicle
+that will be available in both a passenger and a cargo version.
+In addition, the cooperation with Ford will produce the next
+generation of the Amarok.
+Scania will be the first brand of the TRATON GROUP to
+introduce the Group-wide 13-liter drive in a large number of
+models in 2022.
+MAN aims to expand its portfolio of battery electric
+trucks by adding heavy-duty models for long-haul use. It
+plans to expand deliveries of the battery electric e-Delivery
+model presented in fiscal year 2021.
+Group Management Report
+Report on Expected Developments
+181
+Navistar will also work on electrifying its model variants
+in 2022 and systematically align its models with customer
+needs.
+The global spread of the SARS-CoV-2 virus has also affected
+commodity markets. As a result of the imbalance between
+supply and demand both during the pandemic and during
+economic recovery the increase in the price of many raw and
+input materials was very high in relative terms during 2021.
+Compared with the previous year, there was a rise in the
+average prices of the commodities coking coal, lithium, crude
+oil, cobalt, copper, iron ore, natural rubber, aluminum, nickel
+and lead. The price of the precious metals platinum and
+palladium, and especially of rhodium, also rose on average
+over the year. Based on analyses of factors of influence and of
+trends in the commodity markets, we expect the prices of
+most commodities to continue to increase in 2022. There is a
+risk that this will be exacerbated as a result of the Russia-
+Ukraine conflict. For the years 2023 to 2026, we anticipate
+continued volatility in the commodity markets with prices
+trending both upwards and downwards.
+low
+COMMODITY PRICE TRENDS
+INTEREST RATE TRENDS
+The global spread of the Covid-19 pandemic and the mea-
+sures taken to contain it have reduced demand for energy
+and made it harder to raise capital for investment in power
+generation plants. Uncertainty surrounding climate-neutral
+power generation and the route to achieving this goal can
+also be seen. The ultimate aim is to invest in future-proof
+power generation plants. Despite this impact and uncertainty
+on the power generation markets, we expect the trend toward
+decentralized future-proof power stations and gas-based
+applications to further intensify. In addition, demand for new
+and carbon-neutral technologies should continue to increase
+in future.
+With regard to the market development for conventional
+power generation plants, we are anticipating a slow recovery
+of what has been a very weak order situation for many years,
+with increasing investment in power generation using
+biomass and natural gas as transitional energy sources. Con-
+sequently, we are assuming a slight increase in demand for
+steam and gas turbines. Growth in the power generation
+market will be driven by renewable energy in particular. The
+irregularity of power produced in this way will require an
+increase in storage capacity, which will result in a corres-
+ponding expansion of the market for turbocompressors and
+turboexpanders.
+We are expecting good demand for turbomachinery
+in 2022 due to catch-up capital expenditure and strong
+demand for raw materials amid rising prices. It is expected
+that the production plants of market participants will be well
+utilized. This should result in a relaxation of the competition
+which had been intensified by the pandemic.
+In 2022, we anticipate a slight recovery in the after-sales
+business for both diesel engines and turbomachinery. There
+may be a temporary catch-up effect in order intake following
+the postponement of projects over the past two years.
+For the period 2023 to 2026, we expect to see growing
+demand in the power engineering markets. However, the
+extent and timing of this growth will vary in the individual
+business fields. It remains to be seen for how long the
+pandemic will continue to affect the market.
+TRENDS IN THE MARKETS FOR FINANCIAL SERVICES
+We anticipate that automotive financial services will prove
+highly important to global vehicle sales in 2022, particularly
+in the context of the ongoing challenges posed by the Covid-
+19 pandemic and limited vehicle availability as a result of the
+semiconductor shortage. We expect demand to rise in
+emerging markets where market penetration has so far been
+low. Regions with already established automotive financial
+services markets will probably see a continuation of the trend
+towards enabling mobility at the lowest possible total cost.
+Integrated end-to-end solutions, which include mobility-
+related service modules such as insurance and innovative
+packages of services, are likely to become increasingly impor-
+tant for this. Additionally, we expect that demand will
+increase for new forms of mobility, such as rental and car
+subscription (Auto-Abo) services, and for integrated mobility
+services, for example parking, refueling and charging, and
+that the shift initiated in the European financial services
+business with individual customers from financing to lease
+contracts will continue. Especially in the Chinese market, we
+anticipate an increase in the importance of direct business
+between manufacturers and customers. The seamless inte-
+gration of financial services into the online vehicle offering
+will take on increasing importance in efforts to promote this
+type of business. We estimate that this trend will also persist
+in the years 2023 to 2026.
+In the mid-sized and heavy commercial vehicles category,
+we anticipate rising demand for financial services products in
+emerging markets. In these countries in particular, financing
+solutions support vehicle sales and are thus an essential
+component of the sales process. In the developed markets, we
+expect to see increased demand for telematics services and
+services aimed at reducing total cost of ownership in 2022.
+This trend is also expected to persist in the period 2023 to
+2026.
+EXCHANGE RATE TRENDS
+In 2021, the euro appreciated slightly against the US dollar on
+an annual average, but fell slightly against sterling. Here, the
+new EU-UK Trade and Cooperation Agreement continued to
+cause uncertainty. The euro appreciated against the curren-
+cies of some emerging markets, in some cases considerably.
+In particular, the Argentinian peso, Turkish lira, Brazilian real
+and Russian ruble lost value against the European single
+currency. The South African rand, Chinese renminbi and
+Mexican peso appreciated year-on-year against the euro. The
+currencies of some Asian emerging markets weakened
+against the euro on an annual average. For 2022, our plan-
+ning anticipates that the euro will strengthen somewhat
+against the US dollar, pounds sterling and the Chinese
+renminbi. We assume that the Argentinian peso, Brazilian
+real, Mexican peso, South African rand, Russian ruble and
+Turkish lira will depreciate further. As a result of the Russia-
+Ukraine conflict, we expect additional pressure on the
+Russian currency. For 2023 to 2026, we expect that the euro
+will be stable against the key currencies, while the com-
+180
+Report on Expected Developments
+Group Management Report
+parative weakness of the currencies in the aforementioned
+emerging markets will probably continue. However, there is
+still a general event risk, defined as the risk arising from
+unforeseen market developments.
+The challenging macroeconomic conditions, particularly as a
+result of the ongoing Covid-19 pandemic, resulted in interest
+rates around the world remaining very low in relative terms
+in fiscal year 2021. National central banks in the major
+Western industrialized nations made hardly any adjustments
+to their key interest rates, while in contrast they were
+increased in several emerging markets. The US Federal
+Reserve and the European Central Bank left their key interest
+rates at a low level. While the Bank of England already imple-
+mented a first increase in rates at the end of 2021, the US
+Federal Reserve expects rate hikes in 2022. With monetary
+policy remaining relatively expansionary, we expect a gradual
+departure from the existing measures in 2022. Changes in
+key interest rates will depend to a considerable extent on
+inflationary trends in the individual countries. Whether the
+higher inflation rates currently being seen in many countries
+are judged to be temporary or lasting will be crucial here.
+Base effects resulting from the Covid-19 pandemic and
+disruption to supply chains could be seen as grounds to
+assume that they are a temporary phenomenon. We expect
+interest rates to increase slightly for the years 2023 to 2026.
+Motorcycles Ducati will bring onto the market in 2022
+include the new Multistrada V2 and the Multistrada V4
+Pikes Peak. The Ducati Streetfighter family will be enriched by
+the new Streetfighter V2 and Streetfighter V4 SP models. The
+Scrambler 1100 Tribute PRO and the Scrambler Urban Motard
+will also be launched. Furthermore, the Italian motorcycle
+manufacturer is bringing out a completely new model - the
+Ducati Desert X.
+INVESTMENT AND FINANCIAL PLANNING
+To meet people's needs for individual, sustainable, fully con-
+nected mobility and thus increase the Volkswagen Group's
+future viability, we will continue to mobilize our strengths in
+innovation and technology and push the Volkswagen Group's
+transformation into a software-centric mobility provider
+while leveraging our economies of scale and maximizing
+synergies.
+1 3
+00
+2
+Research and
+development risks
+3 Operational risks
+4
+Environmental
+and social risks
+3
+5
+5
+1
+2
+3
+4
+4 2
+and sales
+the sector, markets
+1
+-
+In our current planning for 2022, most of the capex
+(investments in property, plant and equipment, investment
+property and intangible assets, excluding capitalized develop-
+ment costs) will be spent on new products and the elec-
+trification of our model portfolio as well as further develop-
+ment of the modular toolkits, such as the all-electric platform
+for our volume brands - the Modular Electric Drive Toolkit
+(MEB) and those for our premium and sports brands - the
+Premium Platform Electric (PPE) -, which are currently being
+rolled out throughout the Group. In addition, the Scalable
+Systems Platform (SSP) marks the development of a successor
+platform, which will bundle the requirements of the volume,
+premium and luxury brands and generate high levels of
+synergy in the future. We will also focus on the growing digi-
+talization of our vehicles and sites and increase our capital
+expenditure on these. Moreover, we are investing in the
+gradual conversion of our locations for the production of
+electric vehicles and in the creation of battery manufacturing
+capacity with the aim of establishing a battery supply chain
+under our own control. The Automotive Division's ratio of
+capex to sales revenue is expected to fluctuate around a level
+of around 5.5%.
+Besides capex, investing activities will also cover addi-
+tions to capitalized development costs. Among other things,
+these reflect upfront expenditures in connection with
+updating the model range as well as electrification and digi-
+talization. Also included are the services of CARIAD, which is
+developing a standardized operating system for Group brand
+vehicles, along with other projects.
+With the investments in our facilities and models, as well
+as in the development of electric drives and modular toolkits
+and in digitalization, we are laying the foundations for profit-
+able, sustainable growth at Volkswagen. These investments
+also include commitments arising from decisions taken in
+previous fiscal years.
+We aim to finance the investments in our Automotive
+Division from our own capital resources and expect cash
+flows from operating activities to exceed the Automotive
+Division's investment requirements. For 2022, we anticipate
+that cash outflows resulting from the diesel issue will rise and
+mergers and acquisitions will be on a level with the previous
+year. Including any cash outflows in connection with the EU
+antitrust proceedings against Scania, we expect the net cash
+flow to be in the same range as in the previous year.
+In 2022, net liquidity in the Automotive Division is antici-
+pated to be up to 15% higher than the previous year's level.
+These plans are based on the Volkswagen Group's current
+structures.
+Report on Expected Developments 179
+< 25%
+1
+4
+6
+5
+Group Management Report
+Risks from the
+macroeconomy,
+2
+Group Management Report
+> 25%
+medium
+The score for a likelihood of occurrence of more than 50%
+in the analysis period is classified as high; for a medium
+classification, the likelihood of occurrence is at least 25%. For
+the criterion of financial loss, the score rises in line with the
+loss; the highest score of 10 is reached when the potential
+loss is upwards of €1 billion. The criterion of reputational
+damage can have characteristics ranging from local erosion
+of confidence and loss of trust at local level to loss of repu-
+tation at regional or international level. The potential threat
+to adherence to external legal requirements is classified based
+on the influence on the local company, the brand or the Group.
+In addition to strategic, operational and reporting risks,
+risks arising from potential compliance violations (compli-
+ance risks) are also integrated into this process.
+Risk reporting to the committees of Volkswagen AG
+depends on materiality thresholds. Acute risks from a risk
+score of 40 or potential financial loss of €1 billion or more are
+regularly presented to the Board of Management and the
+Audit Committee of the Supervisory Board of Volkswagen AG.
+In addition, the reporting includes all risks from the QRP with
+a risk score of 20.
+In addition, significant changes to the risk situation that
+can arise in the short term, for instance from unexpected
+external events, are reported to the Board of Management as
+186
+Report on Risks and Opportunities
+Group Management Report
+required. This is necessary if the risk may lead to potential
+financial loss of €1 billion or more and the likelihood of
+occurrence is estimated at greater than 50%.
+In recent years, a standardized ICS has been developed
+that goes significantly beyond the requirements for the ICS
+posed by financial reporting. In 22 catalogs of controls, the
+companies within its scope are presented with requirements
+in respect of the process risks and control objectives to be
+covered in order to protect the value chain in a standardized
+manner. In addition to financial reporting issues, for
+example, their content addresses process risks in develop-
+ment, production or compliance.
+Key controls to cover process risks and control objectives
+are also tested for their effectiveness; any weaknesses
+identified are reported to the responsible bodies at Volks-
+wagen AG and resolved in the departments. Like the quarterly
+risk process, the standardized ICS is fully supported by the
+Risk Radar IT system.
+In terms of its content and organizational aspects, the
+standardized ICS thus offers broader protection than the
+regular governance, risk and compliance (GRC) process used
+in the past. With the introduction of the standardized ICS in
+further companies in 2021, the regular GRC process is being
+gradually shut down.
+A separate Group Board of Management Committee for
+Risk Management examines the key aspects of the RMS/ICS
+every quarter. Its tasks are as follows:
+> to further increase transparency in relation to significant
+risks to the Group and their management,
+> to explain specific issues where these constitute a sig-
+nificant risk to the Group,
+> to make recommendations on the further development of
+the RMS/ICS,
+of the damage is calculated from the criteria of financial loss
+(Mat) and reputational damage (Rep) and the potential threat
+to adherence to external legal requirements (Req). A score
+between 0 and 10 is assigned to each of these criteria. The
+measures taken to manage and control risk are taken into
+account in the risk assessment (net perspective).
+> to support the open approach to dealing with risks and
+promote an open risk culture.
+2
++
+We anticipate that automotive financial services will con-
+tinue to prove highly important to global vehicle sales in 2022.
+We believe we are well prepared overall for the future
+challenges pertaining to automotive business activities and
+for the mixed development of the regional automotive
+markets. Our brand diversity, our presence in all major world
+markets, our broad and selectively expanded product range,
+and our technologies and services put us in a good com-
+petitive position worldwide. As part of the transformation of
+our core business, we are positioning our Group brands with
+an even stronger focus on their individual characteristics, and
+are optimizing our vehicle and drive portfolio. The focus is
+primarily on our vehicle fleet's carbon footprint and on the
+most attractive and fastest-growing market segments. In
+addition, we are working to leverage the advantages of our
+multibrand Group even more effectively with the ongoing
+development of new technologies and the enhancement of
+our toolkits. With electric drives, digital connectivity and
+autonomous driving, we want to make the automobile
+cleaner, quieter, more intelligent and safer. We have set our-
+selves the goal of continuing to excite our customers in the
+future and meeting their diverse needs with an appealing
+product portfolio of impressive vehicles and forward-looking,
+tailor-made mobility solutions.
+Each quarter, in addition to the ongoing operational risk
+management, the Group Risk Management department
+sends standardized surveys regarding the risk situation and
+the implementation of countermeasures to all Group brands,
+to significant Group companies and to Volkswagen Financial
+Services AG and Volkswagen Bank GmbH.
+Acute risks for the Volkswagen Group are reported in this
+survey of the risk situation - the quarterly risk process (QRP).
+The responses are used to update the picture of the potential
+risk situation. The assessment of risks from the QRP is
+conducted in the Risk Radar IT system
+The methodology for aggregating risks and assessing the
+Volkswagen Group's risk-bearing capacity was developed
+further in 2021. The aggregated risk situation and risk-
+bearing capacity are compared at half-yearly intervals. There
+were no indications of insufficient risk-bearing capacity at
+the Volkswagen Group in the 2021 fiscal year.
+A score is calculated for each risk by multiplying the
+likelihood of occurrence (Prob) by the potential extent of the
+damage. This enables comparison of the risks. The extent
+CALCULATION OF RISK SCORE
+II
+LIKELIHOOD OF
+OCCURRENCE
+RISK SCORE
+×
+POTENTIAL EXTENT OF DAMAGE
+SCORE
+Prob
+SCORE
+Mat
+SCORE
+Rep
+SCORE
+Req
+5
+Third line: Review by Group Internal Audit
+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 via spot checks in detailed interviews
+with the divisions and companies concerned together with
+the external auditors. The auditor examines the risk early
+warning system integrated in the risk management system
+with respect to its fundamental suitability of being able to
+identify risks that might jeopardize the Company's continued
+existence at an early stage and assesses the functionality of
+the risk early warning and monitoring systems in accordance
+with section 317(4) of the HGB.
+The combined management report of the Volkswagen
+Group and Volkswagen AG is prepared - in accordance with
+the applicable requirements and regulations - centrally but
+with the involvement of and in consultation with the Group
+units and companies.
+In addition, the accounting-related internal control
+system is independently reviewed by Group Internal Audit in
+Germany and abroad.
+Integrated consolidation and planning system
+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 forward-looking data. VoKUS offers
+centralized master data management, uniform reporting, an
+authorization concept and the required flexibility with regard
+to changes to the legal environment, providing a technical
+platform that benefits Group Financial Reporting and Group
+Controlling in equal measure. To verify data consistency,
+VOKUS has a multi-level validation system that primarily
+checks content plausibility between the balance sheet, the
+income statement and the notes.
+188
+Report on Risks and Opportunities
+AVERAGE SCORES OF THE RISK CATEGORIES
+Likelihood
+of occurrence
+10
+9
+8
+high
+> 50%
+7
+The effectiveness of the internal control system in the
+context of the accounting process is systematically assessed
+in significant companies as part of the standardized ICS. This
+begins with a risk analysis and definition of controls with the
+aim of identifying significant risks for the financial reporting
+process. Regular tests based on samples are performed to
+evaluate the effectiveness of the controls. These form the
+basis for a self-evaluation of whether the controls are appro-
+priately designed and effective.
+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
+compliance management system (CMS) as part of its inde-
+pendent audit procedures. The audit plan adopted by the
+Board of Management includes the first and second lines, i.e.
+the risk-mitigating functions in addition to the operational
+units.
+plausibility of the single-entity financial statements and spe-
+cific significant issues at the subsidiaries. Alongside plausi-
+bility checks, other control mechanisms applied during the
+preparation of the single-entity and consolidated financial
+statements of Volkswagen AG include the clear delineation of
+areas of responsibility and the application of the "four eyes"
+principle.
+The Volkswagen IFRS Accounting Manual, which has been
+prepared in line with external expert opinions in certain
+cases, is intended to ensure the application and assessment
+of uniform accounting policies based on the requirements
+applicable to the parent. In particular, it includes more
+detailed guidance on the application of legal requirements
+and industry-specific issues. Components of the reporting
+packages that are required to be prepared by the Group
+companies are also set out in detail there, and requirements
+have been established for the presentation and settlement of
+intragroup transactions and the balance reconciliation
+process that is based on these.
+In addition, scheduled examinations as part of the audit
+of the annual financial statements are conducted at com-
+panies in the Financial Services Division. As a credit insti-
+tution, Volkswagen Bank GmbH, including its subsidiaries, is
+subject to supervision by the European Central Bank, while
+Volkswagen Leasing GmbH as a financial services institution
+and Volkswagen Versicherung AG as an insurance company
+are subject to supervision by the relevant division of the
+Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin – the
+German Federal Financial Supervisory Authority). As part of
+the scheduled supervisory process and unscheduled audits,
+the competent supervisory authority assesses whether the
+requirements, strategies, processes and mechanisms ensure
+solid risk management and solid risk cover. Furthermore, the
+Prüfungsverband deutscher Banken (Auditing Association of
+German Banks) audits Volkswagen Bank GmbH from time to
+time.
+Volkswagen Financial Services AG operates a risk early
+warning and management system. Its aim is to ensure that
+the locally applicable regulatory requirements are adhered to
+and at the same time to enable appropriate and effective risk
+management at Group level. Important components of it are
+regularly reviewed as part of the audit of the annual financial
+statements.
+Monitoring the effectiveness of the risk management system and the
+internal control system
+To ensure the effectiveness of the RMS/ICS, we regularly opti-
+mize it as part of our continuous monitoring and improve-
+ment processes. In the process, we give equal consideration
+to both internal and external requirements. External experts
+assist in the continuous enhancement of our RMS/ICS on a
+case-by-case basis. The results culminate in regular reporting
+to the Board of Management and Supervisory Board of Volks-
+wagen AG.
+RISK EARLY WARNING SYSTEM
+The Company's risk situation is ascertained, assessed and
+documented in accordance with the legal requirements. The
+requirements for a risk early warning system are met by
+means of the RMS/ICS elements described above (first and
+second line). Independently of this, the external auditors
+THE RISK MANAGEMENT AND INTEGRATED INTERNAL CONTROL
+SYSTEM IN THE CONTEXT OF THE FINANCIAL REPORTING PROCESS
+The accounting-related part of the RMS/ICS that is relevant
+for the financial statements of Volkswagen AG and the Volks-
+wagen Group as well as its subsidiaries comprises measures
+Group Management Report
+Report on Risks and Opportunities
+187
+intended to ensure that the information required for the
+preparation of the financial statements of Volkswagen AG,
+the consolidated financial statements and the combined
+management report of the Volkswagen Group and Volks-
+wagen AG is complete, accurate and transmitted in a timely
+manner. These measures are designed to minimize the risk of
+material misstatement in the accounts and in external
+reporting.
+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
+along decentralized lines. For the most part, accounting
+duties are performed by the consolidated companies them-
+selves or entrusted to the Group's shared service centers. In
+principle, the financial statements of Volkswagen AG and its
+subsidiaries prepared in accordance with IFRSS and the Volks-
+wagen IFRS Accounting Manual are transmitted to the Group
+in encrypted form. A standard market product is used for
+encryption.
+Control activities at Group level include analyzing and, if
+necessary, adjusting the data reported in the financial
+statements presented by the subsidiaries, taking into account
+the reports submitted by the auditors and the outcome of the
+meetings on the financial statements with representatives of
+the individual companies. These discussions address both the
+6
+Legal risks
+9 10 11 12 13 14 15 16 17 18 19 20
+STRUCTURE OF THE RISK MANAGEMENT SYSTEM AND INTERNAL
+CONTROL SYSTEM AT VOLKSWAGEN
+Assessing the likelihood of occurrence and extent of
+future events and developments is, by its nature, subject to
+uncertainty. We are therefore aware that even the best RMS
+cannot foresee all potential risks and even the best ICS can
+never completely prevent irregular acts.
+Only by promptly identifying, accurately assessing and effec-
+tively and efficiently managing the risks and opportunities
+arising from our business activities can we ensure the Volks-
+wagen 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 loss to
+the Company, and any risks that might jeopardize its con-
+tinued existence can be ruled out.
+OBJECTIVE OF THE RISK MANAGEMENT SYSTEM AND INTERNAL
+CONTROL SYSTEM AT VOLKSWAGEN
+Internal Audit
+Management
+In this section, we first explain the objective and structure of THE VOLKSWAGEN THREE LINES MODEL
+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
+activities.
+SUPERVISORY BOARD/BOARD OF MANAGEMENT
+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.
+(CONTAINS THE REPORT IN ACCORDANCE WITH SECTION 289(4) OF THE HGB)
+Report on Risks and Opportunities
+Group Management Report
+Report on Risks and Opportunities
+184
+The basis of our success are skilled and dedicated employ-
+ees. We aim to boost their satisfaction and motivation by
+means of equal opportunities, an attractive and modern work-
+ing environment, a forward-looking approach to the organiza-
+tion of work and targeted advanced training programs. We
+aim for operational excellence in all business processes and
+plan our actions so that, every day, we exercise responsibility
+in issues relating to the environment, safety and society. In
+terms of integrity, Volkswagen aims to become a role model
+for a modern, transparent and successful enterprise.
+and acquisitions will be on a level with the previous year.
+Including any cash outflows in connection with the EU
+antitrust proceedings against Scania, we expect the net cash
+flow to be in the same range as in the previous year. In 2022,
+net liquidity in the Automotive Division is anticipated to be
+up to 15% higher than the prior-year figure. We expect the
+return on investment (ROI) to be between 12% and 15%. Our
+declared goal remains unchanged, namely to continue with
+our robust liquidity policy.
+In the Automotive Division, we expect the R&D ratio to
+come in at around 7% and the ratio of capex to sales revenue
+at around 5.5% in 2022. For 2022, we anticipate that cash
+outflows resulting from the diesel issue will rise and mergers
+We expect the sales revenue of the Volkswagen Group and of
+the Passenger Cars Business Area in 2022 to be 8% to 13%
+higher than the prior-year figure. In terms of operating result
+for the Group and the Passenger Cars Business Area, we
+forecast an operating return on sales in the range of 7.0% to
+8.5% in 2022. For the Commercial Vehicles Business Area, we
+anticipate an operating return on sales of 5.0% to 7.0% amid
+a strong year-on-year increase in sales revenue, including
+Navistar. In the Power Engineering Business Area, we expect
+sales revenue to be moderately above the prior-year figure
+and the operating result to be in the low triple-digit million
+euro range. For the Financial Services Division, we forecast
+that sales revenue will be noticeably higher than the prior-
+year figure and that the operating result will be around
+€4.5 billion.
+Report on Expected Developments
+The organizational design of the Volkswagen Group's RMS
+/ICS is based on the internationally recognized COSO frame-
+work for enterprise risk management (COSO: Committee of
+Sponsoring Organizations of the Treadway Commission). The
+purpose of structuring the RMS/ICS in accordance with the
+COSO framework for enterprise risk management is so that
+Group Management Report
+1st
+2nd
+Second line: Group-wide standardized quarterly risk identification and
+reporting
+The first line comprises the operational risk management
+and internal control systems at the individual Group com-
+panies and business units. The RMS/ICS is an integral part of
+the Volkswagen Group's structure and workflows. Events that
+may give rise to risk are identified and assessed locally in the
+divisions and at the investees. Countermeasures are intro-
+duced, the remaining potential impact is assessed, and the
+information incorporated into the planning in a timely
+manner. Material risks are reported to the relevant com-
+mittees on an ad hoc basis. The results of the operational risk
+management process are incorporated into budget planning
+and financial control on an ongoing basis. The targets agreed
+in the budget planning rounds are continually reviewed in
+revolving planning updates. At the same time, the results of
+risk mitigation measures are promptly incorporated into the
+monthly forecasts regarding further business development.
+This means that the Board of Management also has access to
+an overall picture of the current risk situation via the
+documented reporting channels during the year.
+First line: Operational risk management
+Following completion of the implementation of the Risk
+Radar risk management IT system in 2020 and of the stan-
+dardization of the ICS for business processes associated with
+risk at significant companies, the RMS/ICS will continue to be
+developed in future.
+Report on Risks and Opportunities 185
+Group Management Report
+The minimum requirements for the RMS/ICS, including
+the Three Lines Model, are set out in guidelines for the entire
+Group.
+7 8
+Another key element of the RMS/ICS at Volkswagen is the
+Three Lines Model, a basic element required by, among other
+bodies, the European Confederation of Institutes of Internal
+Auditing (ECIIA). In line with this model, the Volkswagen
+Group's RMS/ICS has three lines designed to protect the Com-
+pany from significant risks occurring.
+potential risk areas are covered in full. Uniform Group
+principles are used as the basis for managing risks in a
+standardized manner. Opportunities are not recorded in the
+RMS/ICS processes.
+Coordination
+Collaboration
+Alignment,
+Communication,
+Delegation,
+Direction,
+Resources,
+Oversight
+Accountability,
+Reporting
+<
+Key
+line
+Group Internal
+Audit
+3rd
+line
+Risk Management,
+Compliance, etc.
+line
+Companies and
+business units
+Challenges will arise particularly from the economic
+situation, the increasing intensity of competition, volatile
+commodity and foreign exchange markets, securing supply
+chains and more stringent emissions-related requirements.
+183
+medium
+Financial risks
+6
+(weighted score resulting from financial loss, reputational damage and potential risk of non-compliance with external legal requirements)
+Potential extent of damage
+high
+182
+low
+For 2022, we expect a significantly positive development
+in new registrations for mid-sized and heavy trucks with a
+gross weight of more than six tonnes compared with the
+previous year, with variations from region to region, in the
+markets that are relevant for the Volkswagen Group. A pro-
+nounced increase in overall demand, with regional vari-
+ations, is expected for 2022 in the bus markets relevant for
+the Volkswagen Group.
+and that shortages of intermediates, especially semiconduc-
+tors, and commodities become less intense.
+Trends in the markets for light commercial vehicles in the
+individual regions will also be mixed; on the whole, we
+anticipate a slight increase in the sales volume for 2022. This
+assumes that the Covid-19 pandemic does not flare up again
+We predict that trends in the markets for passenger cars
+in the individual regions will be mixed in 2022. Overall, the
+global volume of new vehicle sales is expected to be moder-
+ately up on the prior year without reaching the pre-pandemic
+level. This prediction assumes that the Covid-19 pandemic
+does not flare up again and that shortages of intermediates,
+especially semiconductors, and commodities become less
+intense. For 2022, we anticipate that the volume of new pas-
+senger car registrations in Western Europe will be distinctly
+above that recorded in the reporting period. In the German
+passenger car market, we expect the volume of new registra-
+tions in 2022 to also distinctly exceed the prior-year figure.
+Sales of passenger cars in 2022 are expected to moderately
+exceed the prior-year figures in markets in Central and
+Eastern Europe - subject to the further development of the
+Russia-Ukraine conflict. Sales volume in the markets for
+passenger cars and light commercial vehicles (up to 6.35 ton-
+nes) in North America in 2022 is forecast to be slightly higher
+than the previous year's level. We anticipate a moderate
+increase overall in new registrations in the South American
+markets in 2022 compared with the previous year. The pas-
+senger car markets in the Asia-Pacific region are expected to
+be slightly up on the prior-year level in 2022.
+The trend in the automotive industry closely follows
+global economic developments. We assume that competition
+in the international automotive markets will intensify
+further.
+Our planning is based on the assumption that global econ-
+omic output will continue to grow in 2022, albeit at a some-
+what lower level overall, after the recovery observed in the
+past fiscal year – provided that the Covid-19 pandemic does
+not flare up again and that shortages of intermediates and
+commodities become less intense. We continue to believe
+that risks will arise from protectionist tendencies, turbulence
+in the financial markets and structural deficits in individual
+countries. In addition, growth prospects will be negatively
+impacted by ongoing geopolitical tensions and conflicts, with
+risks arising especially from the Russia-Ukraine conflict. We
+anticipate that both the advanced economies and the
+emerging markets will experience positive momentum.
+SUMMARY OF EXPECTED DEVELOPMENTS
+the return on investment (ROI) in the Automotive Division
+for 2022 to be between 12% and 15%.
+Risks from mergers &
+7
+acquisitions and/or
+other strategic
+partnerships/
+investments
+RISKS AND OPPORTUNITIES
+Our equity-accounted joint ventures in China are not
+included in the figures above. For 2022, these joint ventures
+plan to invest in e-mobility, further optimization of the
+model portfolio, the development of new mobility solutions
+and digitalization. Their capex will probably exceed the 2021
+level and be financed from the companies' own funds.
+Group Management Report
+TARGETS FOR VALUE-BASED MANAGEMENT
+Based on long-term interest rates derived from the capital
+market and the target capital structure (fair value of equity to
+debt = 2:1), the minimum required rate of return on invested
+capital defined for the Automotive Division remains
+unchanged at 9%.
+In the 2021 reporting period, the Volkswagen Group's
+business continued to be impacted by the Covid-19 pandemic
+and, in particular, the semiconductor supply shortages. Com-
+pared to the previous year, ROI increased in the reporting
+period due to earnings-related factors and, at 10.4 (6.5) %, was
+above both the prior-year figure and our minimum required
+rate of return of 9% (for further information, please see the
+headline “Return on investment (ROI) and value contribution
+in the reporting period" in the chapter entitled "Results of
+Operations, Financial Position and Net Assets"). We expect
+In the Financial Services Division, we are planning higher
+investments in 2022 than in the previous year. We expect the
+development of lease assets and of receivables from leasing,
+customer and dealer financing to lead to funds tied up in
+working capital, of which around half will be financed from
+the gross cash flow. As is common in the sector, the
+remaining funds needed will be met primarily through
+unsecured bonds on the money and capital markets, the
+issuing of asset-backed securities, customer deposits from
+the direct banking business, and through the use of inter-
+national credit lines.
+We use analyses of the competition and the competitive
+environment in addition to market studies to identify not
+only risks but also opportunities that have a positive impact
+on the design of our products, the efficiency with which they
+are produced, their success in the market and our cost
+structure. Where they can be assessed, risks and oppor-
+tunities that we expect to occur are already reflected in our
+medium-term planning and our forecast. The following
+therefore reports on internal and external developments as
+risks and opportunities that, based on existing information,
+may result in a negative or positive deviation from our
+forecast or targets.
+are plotted based on the average scores. In the reporting year,
+no risks with such scores were reported for the “Financial
+risks” and “Risks from mergers & acquisitions and/or other
+strategic partnerships/investments” risk categories.
+All risks reported to the Group Risk Management depart-
+ment with a risk score of 20 or more for the units included
+from the QRP are incorporated in the assessment of the
+Volkswagen Group's risk categories and the reporting to the
+Board of Management, amongst others. The risk categories
+In this section, we outline the main risks and opportunities
+arising in our business activities. In order to provide a better
+overview, we have grouped the risks and opportunities into
+categories. At the beginning of each risk category, we state the
+most significant risks in order of their importance as
+identified using the risk score from the QRP. We then describe
+the individual risks in no particular order. Unless explicitly
+mentioned, there were no material changes to the specific
+risks and opportunities compared with the previous year
+even though the weighting of individual risks has changed.
+Report on Expected Developments
+26
+24
+22
+19
+Audi
+Volkswagen Commercial Vehicles
+•
+34
+•
+.
+Volkswagen Financial Services
+Volkswagen Group China
+TRATON GROUP
+Bentley
+E
+40
+38
+SEAT
+36
+Porsche
+32
+Brands and Business Fields
+Volkswagen Passenger Cars
+ŠKODA
+In addition, the auditors analyzed the Risk Management
+System and the Internal Control System, concluding that the
+Board of Management had taken the measures required by
+section 91(2) of the AktG to ensure early detection of any risks
+endangering the continued existence of the Company. The
+Report on Relationships of Volkswagen AG with Affiliated
+Companies in accordance with section 312 of the AktG
+(dependent company report) for the period from January 1 to
+December 31, 2021 submitted by the Board of Management
+was also audited by the auditors, who issued the following
+opinion: “In our opinion and in accordance with our statutory
+audit, we certify that the factual disclosures provided in the
+report are correct and that the Company's consideration
+concerning legal transactions referred to in the report was not
+unduly high."
+•
+governance/declaration-of-conformity.html. Additional infor-
+mation on the implementation of the recommendations and
+suggestions of the Code can be found in the Group Corporate
+Governance Declaration.
+The joint declarations of conformity by the Board of Man-
+agement and the Supervisory Board are permanently available
+at www.volkswagenag.com/en/InvestorRelations/corporate-
+The Supervisory Board meeting on December 9, 2021 focused
+on the implementation of the recommendations and sug-
+gestions of the Code in the Volkswagen Group. We discussed
+the Code's guidance in detail and issued the annual decla-
+ration of conformity with the recommendations of the Code
+in accordance with section 161 of the AktG together with the
+Board of Management.
+CORPORATE GOVERNANCE AND DECLARATION OF CONFORMITY
+No other conflicts of interest were reported or were discernible
+in the reporting period.
+meeting of the Supervisory Board from March 24 to 26, 2021,
+at which we discussed the report concerning the liability of
+members of the Board of Management of Volkswagen AG in
+connection with the diesel issue and the resolution con-
+cerning the possible assertion of claims against members of
+the Board of Management. Mr. Pötsch also left the room
+during the meeting of the Supervisory Board on June 5, 2021,
+when additional information was provided on this topic and,
+in particular, when the resolution was taken concerning the
+agenda for the 61st Annual General Meeting of Volkswagen AG
+and the resolutions proposed by the Supervisory Board.
+Mr. Hans Dieter Pötsch was a member of the Board of Man-
+agement of Volkswagen AG until October 2015. His move to
+the Supervisory Board had already been planned irrespective
+of the diesel issue. In order to avoid conceivable conflicts of
+interest, Mr. Pötsch generally left the meeting room prior to
+discussions and resolutions adopted by the Supervisory Board
+that might relate to his conduct in connection with the diesel
+issue. For this reason, Mr. Pötsch did not participate in the
+CONFLICTS OF INTEREST
+In the reporting period, we voted in writing on matters such as
+elections to committees, the request for the court appoint-
+ment of Ernst & Young GmbH Wirtschaftsprüfungsgesell-
+schaft (EY) as the auditor for the half-yearly financial report,
+necessitated by the postponement of the Annual General
+Meeting for 2021 to July 2021, and consent to ancillary activi-
+ties by members of the Board of Management.
+On December 9, 2021, at the last meeting of the Supervisory
+Board for the reporting year, we discussed the composition of
+the Board of Management of Volkswagen AG. We also held in-
+depth discussions on the Volkswagen Group's investment and
+financial planning for the period from 2022 to 2026. Another
+agenda item for the meeting was the current state of affairs
+with respect to the diesel issue. We also submitted the annual
+declaration of conformity with the Code together with the
+Board of Management, amended the diversity concept for the
+Board of Management, and approved the decision taken by the
+Board of Management that, in light of the specific circum-
+stances of the pandemic, the Annual General Meeting in 2022
+should be held as an online event.
+At its meeting on October 27, 2021, the Supervisory Board
+prepared the resolution for investment and financial planning
+for the period from 2022 to 2026.
+The meeting of the Supervisory Board on September 24, 2021
+focused particularly on strategic issues.
+To our Shareholders
+Report of the Supervisory Board
+In 2020, the Audit Committee agreed a suitable procedure with
+the Board of Management for ongoing monitoring of the
+Volkswagen Group's related-party transactions. No disclosures
+or approval decisions on the part of the Supervisory Board
+were required for related-party transactions under statutory
+provisions in the reporting year.
+14
+4 out of 4
+9 out of 10
+6 out of 10
+6 out of 7
+10 out of 10
+2 out of 2
+6 out of 6
+14 out of 15
+9 out of 10
+10 out of 10
+5 out of 5
+13 out of 13
+10 out of 10
+2 out of 2
+14 out of 14
+GUNNAR KILIAN
+18 out of 19
+DIVISIONS
+To our Shareholders
+15
+Chair of the Supervisory Board
+Hans Dieter Pötsch
+Rui
+.
+We therefore concurred with the auditors' findings and
+approved the annual financial statements and the consoli-
+dated financial statements prepared by the Board of Man-
+agement at our meeting on March 11, 2022, which the auditors
+also attended for the agenda items relating to the annual and
+consolidated financial statements, the dependent company
+report and the combined management report. The annual
+financial statements are thus adopted. Upon completion of
+our examination of the dependent company report, there are
+no objections to be raised to the concluding declaration by the
+Board of Management in the dependent company report. We
+reviewed the proposal on the appropriation of net profit
+submitted by the Board of Management, taking into account
+in particular the interests of the Company and its shareholders,
+and endorsed the proposal. EY conducted an external audit of
+the content in the combined separate nonfinancial report for
+2021 to attain limited assurance and issued an unqualified
+report. At our meeting on March 11, 2022, EY also took part in
+the discussions on the agenda items relating to the combined
+separate nonfinancial report for 2021. Upon completion of its
+own independent examination of the combined separate Wolfsburg, March 11, 2022
+nonfinancial report for 2021, the Supervisory Board did not
+have any objections. We also resolved that, together with the
+Board of Management, we would prepare the remuneration
+report for fiscal year 2021. The Executive Committee prepared
+the resolution of the Supervisory Board concerning the
+We would like to offer our thanks and particular appreciation
+to the Board of Management, the Works Council, the manage-
+ment teams and all the employees of Volkswagen AG and its
+affiliated companies for their work in 2021. In the face of the
+major challenges which are still resulting from the Covid-19
+pandemic on the one hand, and the difficult supply situation
+for certain raw materials and components on the other, they
+all displayed a high level of personal commitment and
+responsibility in contributing to what was nevertheless a
+successful year for the Volkswagen Group.
+preparation of the remuneration report. As well as reviewing
+whether the remuneration report contained all the disclosures
+required by law, EY went beyond statutory requirements to
+audit its content and issued an unqualified report.
+17
+Report of the Supervisory Board
+To our Shareholders
+Taking into consideration the audit reports and the discussion
+with the auditors, and based on its own conclusions, the Audit
+Committee prepared the documents for the Supervisory Board's
+examination of the consolidated financial statements, the
+annual financial statements of Volkswagen AG, the combined
+management report, the dependent company report and the
+combined separate nonfinancial report for 2021, and reported
+on these at the Supervisory Board meeting on March 11, 2022.
+Following this, the Audit Committee 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 the report by the Audit
+Committee and the audit report, as well as in talks and dis-
+cussions 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 assessment by the Supervisory Board.
+relating to the annual and consolidated financial statements,
+including the dependent company report, the documentation
+relating to the combined management report, and also the
+audit reports prepared by the auditors and the report from EY
+on the external audit of the content of the combined separate
+nonfinancial report for 2021 in good time for their meetings
+both on March 11, 2022. The auditors reported extensively at
+both meetings on the material findings of their audit and were
+available to provide additional information. The Chair of the
+Audit Committee was also in close contact with the auditors,
+including between the meetings and during preparation for
+the Audit Committee meetings.
+The members of the Audit Committee and the members of the
+Supervisory Board were provided with the documentation
+The Supervisory Board also commissioned EY to conduct an
+external limited assurance review of the content of the
+combined separate nonfinancial report for 2021.
+Report of the Supervisory Board
+In line with our proposal, the Annual General Meeting of
+Volkswagen AG on July 22, 2021 elected Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft (EY) as auditors and Group
+auditors for fiscal year 2021. The auditors audited the annual
+financial statements of Volkswagen AG, the consolidated
+financial statements of the Volkswagen Group and the com-
+bined management report and issued unqualified audit
+reports in each case.
+To our Shareholders
+Report of the Supervisory Board
+16
+Our sincere thanks go to all of the departing members of the
+Supervisory Board and the Board of Management for their
+work.
+The Supervisory Board resolved in December 2021 to increase
+the number of members on the Group Board of Management
+and to reorganize the structure and functions of the Board in
+this context. A new Board division - Volkswagen Passenger
+Cars - was established as of January 1, 2022, managed by
+Mr. Ralf Brandstätter with effect from the same date. Moreover,
+a new Board division – Group Sales - was established as of
+February 1, managed by Ms. Hildegard Wortmann with effect
+from the same date. Ms. Hiltrud Werner's term of office on the
+Volkswagen AG Board of Management came to an end on
+January 31, 2022. Responsibility for the Integrity and Legal
+Affairs division, which she had led, passed to Dr. Manfred Döss
+with effect from February 1, 2022. Also with effect from
+February 1, 2022, Ms. Hauke Stars assumed responsibility for
+the IT Board position, which had been held during the interim
+by Dr. Antlitz.
+-
+Dr. Arno Antlitz, previously member of the Board of Man-
+agement of AUDI AG for Finance and Legal Affairs, took over as
+the Volkswagen AG Board of Management member respon-
+sible for Finance and IT effective April 1, 2021. He succeeded
+Mr. Frank Witter, who left the Company at his own request
+effective March 31, 2021. With effect from July 1, 2021, the
+Finance and IT Board position was divided into two separate
+Board positions: Finance and IT. Dr. Antlitz was assigned
+responsibility for Finance, and also held interim responsibility
+for IT until the appointment of a further member of the Board
+of Management.
+uary 1, 2021, the Supervisory Board appointed Mr. Murat
+Aksel, previously Board member for Procurement at the
+Volkswagen Passenger Cars brand, and Mr. Thomas Schmall-
+von Westerholt, previously Board member for Components at
+the Volkswagen Passenger Cars brand, as new members of the
+Board of Management. Mr. Aksel took over responsibility for
+Purchasing, while Mr. Schmall-von Westerholt became the
+Board member responsible for Technology.
+In December 2020, the Supervisory Board of Volkswagen AG
+decided to split up the responsibility for Components and
+Procurement from January 1, 2021, replacing it with two new
+Board positions: Purchasing and Technology. Effective Jan-
+Mr. Athanasios Stimoniaris, former Chair of the Group Works
+Council of TRATON SE, resigned from his post as a member of
+the Volkswagen AG Supervisory Board with effect from August
+31. Mr. Stimoniaris had been a member of the Supervisory
+Board since 2015. Mr. Jens Rothe, Chair of the General Works
+Council of Volkswagen Sachsen GmbH, was appointed by the
+court to replace him with effect from October 22, 2021.
+The terms of office of Dr. Louise Kiesling and Mr. Hans Dieter
+Pötsch as members of the Volkswagen AG Supervisory Board
+duly ended at the close of the 61st Annual General Meeting.
+The Annual General Meeting elected both for a further full
+term of office as shareholder representatives on the Super-
+visory Board. On July 22, 2021, the Supervisory Board of Volks-
+wagen AG reelected Mr. Hans Dieter Pötsch as its Chair and
+Mr. Jörg Hofmann as its Deputy Chair.
+Effective May 11, 2021, Ms. Daniela Cavallo was appointed by
+the court as a replacement member of the Volkswagen AG
+Supervisory Board. Moreover, the Supervisory Board elected
+her as a member of the Executive Committee on May 18, 2021.
+Ms. Cavallo has been the Chair of the General and Group Works
+Councils of Volkswagen AG since the end of April 2021. She
+succeeds Mr. Bernd Osterloh as a member of the Supervisory
+Board and Executive Committee of Volkswagen AG, who
+resigned his post with effect from April 30, 2021.
+Mr. Kai Bliesener, Head of Vehicle Construction, and Auto-
+motive and Supplier Industry Coordinator at IG Metall, stepped
+down from the Volkswagen AG Supervisory Board effective
+March 31, 2021. Mr. Bliesener had been a member of the
+Supervisory Board since June 20, 2020. The court appointed
+Mr. Matías Carnero Sojo, Chair of the General Works Council of
+SEAT, to replace him with effect from April 1, 2021.
+MEMBERS OF THE SUPERVISORY BOARD AND
+BOARD OF MANAGEMENT
+AUDIT OF THE ANNUAL AND CONSOLIDATED FINANCIAL
+STATEMENTS
+Human Resources and Truck & Bus
+To our Shareholders
+Technology
+Bertina Murkovic
+Peter Mosch
+Dr. Louise Kiesling
+Ulrike Jakob
+Marianne Heiẞ
+Dr. Hans-Peter Fischer
+Daniela Cavallo (since May 11, 2021)
+Matías Carnero Sojo (since April 1, 2021)
+Kai Bliesener (until March 31, 2021)
+Dr. Bernd Althusmann
+Dr. Hessa Sultan Al Jaber
+Dr. Hussain Ali Al Abdulla
+Jörg Hofmann
+Bernd Osterloh (until April 30, 2021)
+Hans Dieter Pötsch
+At the meeting of the Supervisory Board on July 28, 2021, we
+discussed the takeover offer for the shares of Europcar Mobil-
+ity Group S.A.
+The next meeting of the Supervisory Board took place
+following the Annual General Meeting of Volkswagen AG on
+July 22, 2021; we discussed the composition of the Supervisory
+Board of Volkswagen AG and analyzed the Annual General
+Meeting.
+The Supervisory Board convened for its next meeting on July 9,
+2021. As well as discussing the composition of the Board of
+Management of Volkswagen AG, we concerned ourselves par-
+ticularly with the new Group strategy, NEW AUTO.
+The agenda of the Supervisory Board meeting on June 5, 2021,
+included discussion of the composition of the Board of Man-
+agement and Supervisory Board of Volkswagen AG, the con-
+clusion of liability settlements with former members of the
+Board of Management, the conclusion of a coverage settle-
+ment with the D&O insurers in connection with the diesel
+issue, and also the agenda for the 61st Annual General Meeting
+of Volkswagen AG, especially the resolutions proposed by the
+Supervisory Board.
+On May 8, 2021, the Supervisory Board met to discuss, in
+particular, the merger squeeze-out at MAN SE.
+At the next meeting of the Supervisory Board, which was held
+from March 24 to 26, 2021, including breaks, we focused on
+the report concerning the liability of members of the Board of
+Management of Volkswagen AG in connection with the diesel
+issue and on the resolution concerning the possible assertion
+of claims against members of the Board of Management.
+13
+Report of the Supervisory Board
+28
+The first Supervisory Board meeting of the reporting year took
+place on February 26, 2021. Following a detailed examination,
+we approved the consolidated financial statements and the
+annual financial statements of Volkswagen AG for 2020 pre-
+pared by the Board of Management. We examined the com-
+bined management report, the combined separate nonfinan-
+cial report for 2020 and the precautionary Report by the Board
+of Management on Relationships of Volkswagen AG with
+Affiliated Companies in accordance with section 312 of the
+AktG (dependent company report). Upon completion of our
+examination of the dependent company report, we came to
+the conclusion that there were no objections to be raised to the
+concluding declaration by the Board of Management in the
+dependent company report. Other agenda items included the
+current state of affairs with respect to the diesel issue and
+financing measures at the Volkswagen Group. We also dis-
+cussed the establishment of joint ventures by Bugatti and
+Rimac to develop, manufacture and sell hyper sports cars, and
+by Sitech and Brose to develop and manufacture complete seat
+units, seat structures and components, and solutions for the
+vehicle interior.
+TOPICS DISCUSSED BY THE SUPERVISORY BOARD
+In connection with their seat on the Supervisory Board,
+members of the Supervisory Board receive support from the
+Company upon induction as well as with respect to education
+and training; the Company particularly supports the organi-
+zation of seminars and bears the costs thereof. During the
+reporting year, for example, the members of the Supervisory
+Board participated in training on the amendments to the
+Finanzmarktstabilisierungsgesetz (German Financial Market
+Stabilization Act), on amendments to the remuneration report
+in accordance with the Gesetz zur Umsetzung der Aktionärs-
+rechte-Richtlinie (German Act Implementing the Shareholders
+Rights Directive) and on developments in the field of
+sustainability reporting. In addition, the members of the Audit
+Committee received training on selected accounting issues
+and regulatory developments. Supervisory Board members
+appointed for the first time are also provided with a detailed
+introduction to topics that apply specifically to the
+Supervisory Board of Volkswagen AG.
+Furthermore, the shareholder and employee representatives
+generally met for separate preliminary discussions before
+each of the Supervisory Board meetings.
+The following table shows the number of meetings of the full Board and the committees as well as the individual participation
+of the members of the Supervisory Board in 2021:
+Hans Dieter Pötsch
+Dr. Hans Michel Piëch
+Dr. Wolfgang Porsche
+THOMAS SCHMALL-VON WESTERHOLT
+10 out of 10
+16 out of 16
+10 out of 10
+8 out of 10
+10 out of 10
+4 out of 4
+10 out of 10
+10 out of 10
+15 out of 15
+7 out of 7
+7 out of 8
+2 out of 2
+Dr. Ferdinand Oliver Porsche
+0 out of 2
+6 out of 10
+4 out of 10
+18 out of 18
+9 out of 10
+18 out of 19
+9 out of 10
+Supervisory Board Meetings of the Committees
+Meetings of the full
+Werner Weresch
+Stephan Weil
+Athanasios Stimoniaris (until August 31, 2021)
+Conny Schönhardt
+Jens Rothe (since October 22, 2021)
+9 out of 10
+To our Shareholders
+30
+12
+Report of the Supervisory Board
+DR. ARNO ANTLITZ
+Finance
+10
+Report of the Supervisory Board
+Report of the Supervisory Board
+(in accordance with section 171(2) of the AktG)
+Ladies and gentlemen,
+In fiscal year 2021, the work of the Supervisory Board of Volks-
+wagen AG and its committees focused on the Volkswagen
+Group's strategic direction. The Supervisory Board regularly
+deliberated on the Company's position and development in
+the reporting period. We supervised and supported the Board
+of Management in its running of the business and advised it
+on issues relating to the management of the Company in
+accordance with our duties under the law, the Articles of
+Association and the rules of procedure. We also observed the
+relevant recommendations and suggestions of the German
+Corporate Governance Code (the Code) at all times. The Super-
+visory Board was directly involved in all decisions of funda-
+mental importance to the Group. Additionally, we discussed
+strategic considerations with the Board of Management at
+regular intervals.
+The Board of Management complied with its disclosure obli-
+gations, which are set out in the information policy adopted
+by the Supervisory Board in 2018. The Board of Management
+provided us with information regularly, promptly and
+comprehensively both in writing and orally, particularly on all
+matters of relevance to the Company relating to its strategy,
+business development and the Company's planning and
+position. This also included the risk situation and risk man-
+agement. In this respect, the Board of Management also
+informed the Supervisory Board of further improvements to
+the risk and compliance management systems. In addition,
+the Supervisory Board received information about compli-
+ance and other topical issues from the Board of Management
+on an ongoing basis. We received the documents relevant to
+our decisions in good time for our meetings. At regular
+intervals, we also received a detailed report from the Board of
+Management on the current business position and the fore-
+cast for the current year. Any deviations in performance from
+the plans and targets previously drawn up were explained in
+detail by the Board of Management, either in person or in
+writing. Together with the Board of Management we analyzed
+the reasons for the deviations and determined corresponding
+countermeasures. In particular, the Board of Management
+reported in detail and in a timely manner on the impact of the
+Covid-19 pandemic and the semiconductor supply situation
+and explained the measures that had been taken.
+In addition, the Chair of the Supervisory Board consulted with
+the Chair of the Board of Management at regular intervals
+between meetings to discuss important current issues. These
+included the Group's strategy and planning, its business
+development, and the risk situation and risk management,
+including integrity and compliance issues in the Volkswagen
+Group. Within reason, the Chair of the Supervisory Board
+discussed Supervisory Board-specific topics with investors
+and, in consultation with the Board of Management, also non-
+Supervisory Board-specific topics. Governance issues were one
+focus of the discussions. The Chair of the Supervisory Board
+informed the Supervisory Board of such discussions after they
+had taken place.
+The Supervisory Board held a total of ten meetings in fiscal
+year 2021. The average attendance rate was 89.7%. In addition,
+resolutions on particularly urgent matters were adopted in
+writing or by using electronic communications media. The
+challenges and restrictions resulting from the Covid-19
+pandemic again necessitated additional flexibility for the
+meetings of the Supervisory Board in fiscal year 2021. More-
+To our Shareholders
+Report of the Supervisory Board
+To our Shareholders
+A further committee formed by the Supervisory Board is the
+Special Diesel Engine Committee, which was in existence from
+October 2015 to December 2021. Comprised of three share-
+holder representatives and three employee representatives,
+the Special Diesel Engine Committee was responsible for sup-
+porting the investigations in connection with the manipu-
+lation of emissions figures for Volkswagen Group diesel
+engines and preparing Supervisory Board resolutions for nec-
+essary measures at Supervisory Board level. To this end, the
+Special Diesel Engine Committee was provided with regular
+information by the Board of Management. The Chair of the
+Special Diesel Engine Committee reported regularly on the
+Committee's work to the Supervisory Board. The tasks of the
+Special Diesel Engine Committee were essentially completed
+by the end of December 2021: the Supervisory Board has
+completed its investigations into the diesel issue as far as the
+civil liability of the members of the boards are concerned. In
+light of this situation, the Supervisory Board dissolved the
+Special Diesel Engine Committee with effect from the end of
+December 31, 2021. Any measures connected with the diesel
+issue to be addressed in the future will be discussed directly by
+the full Supervisory Board and prepared by the Executive
+Committee. The Board of Management will also report to the
+Executive Committee or to the full Supervisory Board on
+current developments in connection with the diesel issue in
+future. In 2021, the Special Diesel Engine Committee met on
+two occasions to discuss, among other things, a report from
+the Board of Management on the state of affairs with respect
+to the diesel issue as well as the latest developments in the
+consumer action for model declaratory judgment brought by
+the Verbraucherzentrale Bundesverband (Federation of Con-
+sumer Organizations) and in various other legal proceedings.
+The Audit Committee held four meetings in 2021. It focused
+on the annual and consolidated financial statements, the Risk
+Management System including the effectiveness of the
+Internal Control System and the Internal Audit System, and the
+work performed by the Company's Compliance organization.
+In addition, the Audit Committee concerned itself with the
+Volkswagen Group's quarterly reports and the half-yearly
+financial report, as well as with current issues, the supervision
+of financial reporting and the financial reporting process, and
+the examination thereof by the auditors.
+12
+During the reporting year, the Mediation Committee estab-
+lished in accordance with section 27(3) MitbestG was not
+required to convene formally in the exercise of its statutory
+duties. However, in October 2021, the Supervisory Board
+entrusted the Mediation Committee with the additional task
+of developing a proposal for the future structure of areas of
+responsibility within the Board of Management and possible
+changes to the composition of the Board of Management. To
+this end, the Mediation Committee established in accordance
+with section 27(3) MitbestG met six times during the
+reporting year.
+The Executive Committee met twelve times in the reporting
+period. At its meetings, the Executive Committee meticulously
+prepared the resolutions of the Supervisory Board, discussed
+the composition of the Board of Management and took
+decisions on matters such as contractual issues concerning
+the Board of Management other than remuneration, and
+consent to ancillary activities by members of the Board of
+Management.
+In order to discharge the duties entrusted to it, the Supervisory
+Board has established four committees: the Executive Com-
+mittee, the Nomination Committee, the Mediation Commit-
+tee established in accordance with section 27(3) of the Mit-
+bestimmungsgesetz (MitbestG - German Codetermination Act)
+and the Audit Committee. The Executive Committee is com-
+prised of four shareholder representatives and four employee
+representatives. The shareholder representatives on the Exec-
+utive Committee make up the Nomination Committee. The
+Audit Committee and the Mediation Committee are each com-
+posed of two shareholder representatives and two employee
+representatives. The members of these committees as of
+December 31, 2021 are stated in the Group Corporate Gover-
+nance Declaration.
+COMMITTEE ACTIVITIES
+over, the pandemic entailed travel and contact restrictions,
+especially for those members of the Supervisory Board who
+live outside Germany, and made additional demands of those
+members of the Supervisory Board who also hold special roles
+in industry and politics. Nevertheless, all members of the
+Supervisory Board except for Dr. Al Abdulla attended over half
+of the meetings of the Supervisory Board and the committees
+of which they are members. Supervisory Board members who
+could not attend a meeting were able to engage with the
+meeting topics using the preparatory documents.
+11
+The Nomination Committee is responsible for proposing
+suitable candidates for the Supervisory Board to recommend
+for election to the Annual General Meeting. This committee
+met on one occasion in 2021.
+There is a risk that the Volkswagen Group could experience
+decreases in demand, possibly exacerbated by media reports or
+insufficient communication. Other potential consequences
+include lower margins in the new and used car businesses
+and a temporary increase in funds tied up in working capital.
+Sales risks
+The measures we use to counter the substantial economic
+and extraordinary risks include flexible production concepts
+and cost flexibility by means of temporary external
+personnel, working time accounts and Kurzarbeit (short-time
+working), and the necessary structural adjustments.
+As part of the capital goods industry, the Power Engi-
+neering business is affected by fluctuations in the investment
+climate. Even minor changes in growth rates or growth
+forecasts, resulting from geopolitical uncertainties or volatile
+commodities and foreign exchange markets, for example,
+carry the risk of significant changes in demand or the
+cancellation of already existing orders.
+We are working systematically to leverage market oppor-
+tunities at a global level, for example by positioning ourselves
+as a solution provider for reduced-CO2 drive and energy-
+generation technologies as well as for storage technology.
+Moreover, significant potential can be leveraged in the
+medium term by enhancing our after-sales business through
+the introduction of new digital products and the expansion
+of our service network. The requirements for occupational
+safety, which will continue to increase in the future, the
+availability of the plants that are already in operation, the
+increase in environmental compatibility, and efficient
+operation, together with the large number of engines and
+plants, will provide the basis for growth. Digital service
+solutions, for instance for remote plant surveillance, offer
+growth potential despite the pandemic.
+We address these risks by constantly monitoring the mar-
+kets, focusing on less strongly affected market segments, work-
+ing closely with all business partners such as customers and
+licensees, and introducing new and improved technologies.
+In turbomachinery, there is the risk that planned projects and
+orders will be scaled back or postponed due to negative devel-
+opments in sales markets or individual applications.
+The growing number of automobile manufacturers with
+local production has resulted in a sharp increase in price
+pressure and competition. The Brazilian market plays a key
+role for the Volkswagen Group. To strengthen our com-
+petitive position here, we offer vehicles tailored specially
+for this market that are locally produced, such as the Gol
+and the Nivus.
+Global economic trends are likely to continue, such as digi-
+talization and the increasing interest in emissions-reducing
+technologies associated with decarbonization. Growing
+global energy needs call for innovation in the industry and a
+growing willingness on the part of governments to invest in
+line with the global climate policy.
+Power Engineering
+Political and economic uncertainty in the region weigh on
+the passenger car markets. In spite of this instability, the
+Middle East region offers short-term and long-term growth
+potential. We aim to leverage the potential for growth with
+a range of vehicles that has been specifically tailored to this
+market, without having our own production facilities there.
+> Middle East
+> Brazil
+In the USA, Volkswagen Group of America is steadfast in its
+pursuit to become a full-fledged volume supplier and
+expand its market share. The expansion of local production
+capacity - including production for electric vehicles from
+2022 will allow the Group to better serve the market in
+the North America region. We are also working intensively
+on offering additional products specifically tailored to the
+US market.
+The Volkswagen Group's multibrand strategy may weaken
+individual Group brands if there are overlaps in customer
+segments or the product portfolio. This effect may be
+reinforced by the Volkswagen Group's common-parts stra-
+tegy, as this strategy means that, in some cases, the differ-
+ences in product substance between the brands are small. As
+a result, there could be a risk of internal cannibalization
+between the Group brands, higher marketing costs, or
+Despite an improved market level, the marine market
+continues to see the consequences of the Covid-19 pandemic
+and the ongoing uncertainty regarding future emissions regu-
+lations. There is a risk that investments will be postponed and
+that there will be a distinct slowdown in project business.
+192
+Russia-Ukraine conflict
+Group Management Report
+There is a risk that a further escalation of the conflict
+could have a material adverse effect on the results of oper-
+ations, financial position and net assets of the Volks-
+wagen Group.
+In relation to the net assets, financial position and results
+of operations of the Volkswagen Group, the business activi-
+ties of the Volkswagen Group in these two countries are insig-
+nificant.
+In Russia, the Volkswagen Group has in particular the
+production company at the Kaluga site, as well as sales units
+and financing companies. They could above all be adversely
+affected by the sanctions already resolved, but also by new
+sanctions and general developments in Russia.
+The Volkswagen Group does not have any material
+subsidiaries and equity investments in Ukraine.
+Nor is it possible at this stage to predict with sufficient
+certainty to what extent further escalation of the Russia-
+Ukraine conflict will impact the global economy and growth
+in the industry in fiscal year 2022.
+At the time of preparing this report, there is a risk that the
+latest developments in the Russia-Ukraine conflict will have a
+negative impact on the Volkswagen Group's business. This
+may also result from bottlenecks in the supply chain. At the
+present time, it is not yet possible to conclusively assess the
+specific effects.
+> USA
+Report on Risks and Opportunities
+Power Engineering's two-stroke engines are produced
+exclusively by licensees, particularly in South Korea, China
+and Japan. The global demand for ships is increasing due to
+the overall positive development in world trade; however, the
+volatility in new shipbuilding orders poses the risk of
+declining license revenues. Due to changes in the competitive
+environment, especially in China, there is also the risk of
+losing market share.
+Commercial vehicles are capital goods: even minor
+changes in growth rates or growth forecasts may significantly
+affect transport requirements and thus demand. The
+resulting risk of production fluctuations calls for a high
+degree of flexibility from the manufacturers. Although pro-
+Automotive markets around the world are exposed to
+risks from government intervention such as tax increases,
+which curb private consumption, and from restrictions on
+trade and protectionist tendencies such as tariffs and
+sanctions. Furthermore, there are future risks from the sale of
+electrified vehicles if the minimum requirements for local
+content under free trade agreements cannot be achieved.
+Sales incentives may lead to shifts in the timing of demand.
+A combination of buyer reluctance in some markets as a
+result of the crisis, and increases in some vehicle taxes based
+on CO2 emissions which have already been observed in
+many European countries may shift demand towards
+smaller segments and engines, for example. We counter the
+risk that such a shift will negatively impact the Volkswagen
+Group's financial situation by constantly developing new,
+fuel-efficient vehicles and alternative drive technologies,
+based on our drivetrain, fuel and mobility strategies.
+-
+Consumer demand is shaped not only by real factors such
+as disposable income, but also by psychological factors that
+cannot be planned for. A current example is that of the
+Covid-19 pandemic. Households' worries about the future
+economic situation, for example, may lead to unexpected
+buyer reluctance. This is particularly the case in saturated
+automotive markets such as Western Europe, where demand
+could drop as a result of owners holding on to their existing
+vehicles for longer. We are countering the risk of buyer
+reluctance with our attractive range of models and our strict
+policy of customer orientation.
+The fleet customer business continues to be characterized
+by increasing concentration and internationalization, accom-
+panied by the risk that the loss of individual fleet customers
+may result in relatively high volume losses. Viewed over an
+extended period, the fleet customer business is more stable
+than the business with retail customers. The Volkswagen
+Group is well positioned with its broad portfolio of products
+and drive systems, as well as its target-group-focused cus-
+tomer care, and counteracts a concentration of default risks
+at individual fleet customers or markets. The consistently
+high market share in Europe shows that fleet customers still
+have confidence in the Group.
+repositioning expenses. By sharpening the brand identities as
+part of our Best Brand Equity instrument, we are working to
+minimize these risks.
+duction volumes are significantly lower, the complexity of
+the trucks and buses range does in fact significantly exceed
+the already very high complexity of the passenger cars range.
+Key factors for commercial vehicle customers are total cost of
+ownership, vehicle reliability and the service provided.
+Furthermore, customers are increasingly interested in addi-
+tional services such as freight optimization and fleet uti-
+lization, which we offer in the commercial vehicle segment
+through the digital brand RIO, for example.
+The Volkswagen Group has consolidated its activities in
+this strategically important future market and launched a
+model initiative with new models tailored to customers'
+needs: the Taigun from the Volkswagen Passenger Cars
+brand and the ŠKODA Kushaq.
+Volkswagen AG may be exposed to increased competition
+in aftermarkets. This is due to the provisions of the block
+exemption regulations, which have applied to after-sales
+services since June 2010, the provisions of EU Regulation
+566/2011 dated June 8, 2011 and the room for interpretation
+concerning the amendments included in EU Regulation
+858/2018 applicable from September 1, 2020, regarding
+independent market participants' access to technical infor-
+- also with regard to e-mobility - and to defend our strong
+market position in China over the long term, we are con-
+tinuously expanding our product range to include models
+that have been specially developed for this market. We are
+further extending our production capacity in this growing
+market.
+190
+There is a risk that excess capacity in global automotive
+production may lead to a rise in inventories and therefore an
+increase in tied-up capital. With a decline in demand for
+vehicles and genuine parts, automotive manufacturers may
+Price pressure in established automotive markets for new
+and used vehicles as a result of high market saturation is a
+further risk for the Volkswagen Group as a supplier of volume
+and premium models. Competitive pressures are likely to
+remain high in the future. Individual manufacturers may
+respond by offering incentives in order to meet their sales
+targets, putting the entire sector under additional pressure.
+The growth markets of Central and Eastern Europe, South
+America and Asia are particularly important to the Volks-
+wagen Group. These markets harbor considerable potential;
+however, the underlying conditions in some countries in
+these regions make it difficult to increase unit sales figures
+there. Examples of these are customs regulations or mini-
+mum local content requirements for production. At the same
+time, wherever the economic and regulatory situation per-
+mits, there are opportunities above and beyond current
+projections. These arise from faster growth in the emerging
+markets where vehicle densities are currently still low.
+Outside Western Europe and China, delivery volumes are
+spread widely across the key regions: Central and Eastern
+Europe, North America and South America. In addition, we
+either already have a strong presence in numerous existing
+and developing markets or are working systematically
+towards this goal. Particularly in smaller markets with growth
+potential, we are increasing our presence with the help of
+strategic partnerships in order to cater to local requirements.
+Sector-specific risks and market opportunities/potential
+Western Europe, especially Germany, and China are our main
+sales markets. A drop in demand in these regions due to the
+economic climate would have a particularly strong impact on
+the Company's earnings including financial services. We
+counter this risk with a clear, customer-oriented and inno-
+vative product and pricing policy.
+The macroeconomic environment may also give rise to
+opportunities for the Volkswagen Group if actual develop-
+ments turn out to be more positive than expected.
+Report on Risks and Opportunities
+Overall, we expect a positive development of the global
+economy for 2022. However, due to the risk factors men-
+tioned, as well as cyclical and structural aspects, another
+slump in the global economy or a period of below-average
+growth rates is also possible.
+Geopolitical tensions and conflicts, along with signs of
+fragmentation in the global economy, are a further major risk
+factor to the performance of individual countries and regions.
+In light of the existing, strong global interdependence, local
+developments could also have adverse effects on the world
+economy. Any escalation of the conflicts in the Middle East or
+Africa, and especially the current conflict between Russia and
+Ukraine, for example, could cause upheaval on the global
+energy and commodity markets and exacerbate migration
+trends. An aggravation of the situation in East Asia could also
+put a strain on the global economy. The same applies to
+violent conflicts, terrorist activities, cyber attacks and the
+The economic development of some emerging economies
+is being hampered primarily by dependence on energy and
+commodity prices and capital inflows, but also by socio-
+political tensions. Corruption, inadequate government struc-
+tures and a lack of legal certainty can also pose risks.
+We believe that risks to positive growth in global economic
+output arise primarily from a failure to contain the Covid-19
+pandemic in a lasting way, turbulence in the financial and
+commodity markets, supply shortages in connection with
+imbalances between supply and demand, increasingly
+protectionist tendencies, and structural deficits, which
+pose a
+threat to the performance of individual advanced economies
+and emerging markets. In addition, there are increasing
+environmental challenges that affect individual countries
+and regions to varying degrees. The potential worldwide
+transition from an expansionary to a more restrictive mone-
+tary policy together with continuing inflationary tendencies
+also presents risks for the macroeconomic environment.
+High private and public-sector debt in many countries is
+clouding the outlook for growth and may likewise cause
+markets to respond negatively. Demographic change may
+also inhibit growth. A decline in growth in key countries and
+regions often has an immediate impact on the state of the
+global economy and therefore poses a central risk. There are
+also risks from the still uncertain consequences of the United
+Kingdom's exit from the EU.
+Macroeconomic risks and opportunities
+The most significant risks from the QRP lie in restrictions
+on trade and increasingly protectionist tendencies resulting
+in a negative trend in markets and unit sales.
+For this risk category, the likelihood of occurrence is classified
+as high (previous year: high) and the potential extent of
+damage is classified as medium (previous year: medium).
+Risks and opportunities from the macroeconomy, the sector, markets
+and sales
+spread of infectious diseases, which may suddenly result in
+unexpected market reactions.
+> India
+Group Management Report
+Supply chain disruption may give rise to the risk of
+underutilization of capacity in global automobile production,
+meaning that existing demand can only be partially met.
+191
+Report on Risks and Opportunities
+Group Management Report
+Demand for vehicles is expected to increase in the coming
+years due to the need for individual mobility. It is also
+expected that demand will shift from the coastal metropo-
+lises to the country's interior and that competitive pressure
+from local manufacturers will increase. In order to leverage
+the considerable opportunities offered by this market
+Below, we outline the regions and markets with the
+greatest growth potential for the Volkswagen Group.
+> China
+There is also a risk of freight deliveries worldwide being
+shifted from trucks to other means of transport, and of
+demand for the Group's commercial vehicles falling as a
+result.
+The automotive industry is facing a process of trans-
+formation with far-reaching changes. Electric drives, con-
+nected vehicles and autonomous driving are associated with
+both opportunities and risks for our vehicle sales, our after-
+sales business and our dealerships. In particular, more
+rapidly evolving customer requirements, swift implemen-
+tation of legislative initiatives, including in connection with
+the achievement of climate protection targets, and the
+market entry of new competitors from outside the industry
+will require changed products at a faster pace of innovation
+and adjustments to business models. There is uncertainty
+regarding the widespread use of electric vehicles and the
+availability of the necessary charging infrastructure.
+adjust their capacities or intensify measures to promote
+sales. This would lead to additional costs and greater price
+pressure.
+In Germany, legislation entered into force on December 2,
+2020 to restrict or abolish design protection for repair parts
+through the introduction of a repair clause. In addition, the
+European Commission is evaluating the market with regard
+to existing design protection. A possible restriction or
+abolition of design protection for visible replacement parts
+could adversely affect the Volkswagen Group's genuine parts
+business.
+Other factors
+distribution system, particularly with respect to dual distri-
+bution systems. A final evaluation of whether and to what
+extent the distribution system of Volkswagen AG will be
+specifically affected by the legal changes will only be possible
+once the new regulation has been adopted.
+Volkswagen maintains a selective distribution system.
+Within the European Union, dealers and service partners are
+selected - where permissible – using qualitative and quanti-
+tative-qualitative criteria in accordance with the provisions of
+EU Regulations 330/2010 and 461/2010. Regulation 330/2010
+is currently being revised by the European Commission. The
+new version is due to enter into force on June 1, 2022. The
+European Commission published a first draft in July 2021.
+This contains new requirements on the design of a selective
+We continue to approve loans for vehicle financing on the
+basis of the same cautious principles applied in the past, for
+example by taking into account the regulatory requirements
+of section 25a(1) of the Kreditwesengesetz (KWG - German
+Banking Act).
+Economic performance may vary from region to region.
+The resulting risks for our trading and sales companies, such
+as in relation to efficient inventory management and a
+profitable dealer network, are substantial and are being
+responded to with appropriate measures on their part. How-
+ever, financing business activities through bank loans
+remains difficult. Our financial services companies offer
+dealers financing on attractive terms with the aim of
+strengthening their business models and reducing oper-
+ational risk. We have installed a comprehensive liquidity risk
+management system so that we can promptly counteract any
+liquidity bottlenecks at the dealership end that could hinder
+smooth business operations.
+In Europe, there is a risk that further municipalities and
+cities will impose a driving ban on vehicles with combustion
+engines in order to comply with emission limits. China
+imposed a so-called “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 manufacturer's new passenger car fleet. To
+ensure compliance with emissions standards, we contin-
+uously tailor our range of vehicle models and engines to the
+conditions in the relevant markets. These requirements may
+lead to higher costs and consequently to price increases and
+declines in volumes.
+The demand that built up in individual established mar-
+kets in times of crisis could result in a marked recovery if the
+economic environment eases more quickly than expected.
+mation.
+In addition to the risks outlined in the individual risk
+categories, there are other factors that cannot be predicted
+We use the latest findings from the world of physics and
+other areas of science to plot our course. In addition, we
+conduct research such as trend analyses and customer sur-
+veys and examine the relevance of the results for our custom-
+ers. We counter the risk that it may not be possible to develop
+modules, vehicles, or services - especially in relation to
+e-mobility, digitalization and software - within the specified
+time frame, to the required quality standards, or in line with
+cost specifications, by continuously and systematically
+monitoring the progress of all projects; at present we are also
+taking account of the Covid-19 pandemic.
+Report on Risks and Opportunities 193
+Legal changes, for instance in the context of the change-
+over to the WLTP test procedure, may impact production. For
+one thing, a temporary reduction in the range causes
+demand to focus on the available variants. Moreover, gaps in
+production can occur if model variants have not been
+approved. These fluctuations necessitate measures to stabilize
+production, such as the temporary storage of vehicles until
+official approval.
+experience of past production starts and identifying weak-
+nesses at an early stage so as to ensure – to the highest degree
+possible - that production volumes and quality standards are
+met during the start of production of our vehicles
+throughout the Group.
+Group Management Report
+Report on Risks and Opportunities
+196
+The diversity of our models, the reduced product life
+cycles and the use of complex processes and technical sys-
+tems are associated with a risk that the start of production of
+a vehicle may be delayed. We address this risk by drawing on
+Sudden changes in customer demand for specific equip-
+ment features in our products, and the decreasing predicta-
+bility of demand, may lead to supply bottlenecks. We mini-
+mize this risk, for example, by continuously comparing our
+available resources against future demand scenarios. If bottle-
+necks in the supply of materials are indicated, we can intro-
+duce countermeasures far enough in advance.
+Production capacity is planned several years in advance
+based on long-term sales planning for all vehicle projects.
+This involves a degree of risk as it is subject to market
+momentum and changes in demand. If forecasts are too
+optimistic, there is a risk that capacity will not be fully
+utilized. However, forecasts that are too pessimistic pose a
+risk of undercapacity, as a result of which, it may not be
+possible to meet customer demand. In the event of short-
+notice fluctuations in demand beyond the technical capacity
+that has been installed, Volkswagen or its suppliers may be
+unable to meet demand that goes beyond the available
+technical flexibility. We counter such risks by matching
+demand and capacity at frequent intervals and issuing
+program scheduling guidelines where necessary.
+Risks arising from long-term production
+Volatile developments in the global automotive markets,
+accidents at suppliers and disruptions in the supply chain,
+such as the semiconductor shortages, may cause fluctuations
+in production volumes affecting both vehicle models and
+plants. In specific markets we are seeing a trend away from
+orders for conventional vehicles with combustion engines
+and towards increased orders for electric vehicles. We use
+established tools, such as flexible working time models, to
+address possible risks related to fluctuations in the mix of
+vehicle types. The international production network enables
+us to respond flexibly at the sites. "Turntable concepts" adjust
+capacity utilization between production facilities. At multi-
+brand sites, volatility can also be balanced across brands.
+legal due diligence obligations, which may lead to supply
+shortages. Requirements are compared with existing pro-
+cesses with the help of gap analyses, and processes are
+developed and implemented to fill in any gaps. In 2021, we
+introduced a human rights due diligence management
+system to reduce human rights risks throughout our entire
+supply chain. An additional management system has been set
+up to effectively manage the environmental risks in the raw
+material supply chains.
+Risks in the supply chain may also arise in relation to the
+non-fulfillment of human rights- and environment-related
+Specialists in Purchasing systematically investigate risks
+resulting from antitrust violations by suppliers and file
+claims for any losses that may arise.
+It is not possible at present to rule out the possibility of a
+further increase in recalls of various models produced by a
+variety of manufacturers in which certain airbags manufac-
+tured by Takata were installed. This could also affect Volks-
+wagen Group models.
+Quality problems may necessitate technical intervention
+involving a substantial financial outlay where costs cannot be
+passed on to the supplier or can only be passed on to a
+limited extent. Assuring quality is of fundamental impor-
+tance especially in the US, Brazilian, Russian, Indian and
+Chinese markets, for which we develop vehicles specific to the
+countries and where local manufacturers and suppliers have
+been established, particularly as it may be very difficult to
+predict the impact of regulations or official measures. We
+continuously analyze the conditions specific to each market
+and adapt quality requirements to their individual needs. We
+counter the local risks we identify by continuously devel-
+oping measures and implementing them locally, thereby
+preventing quality defects in the supply chain from arising.
+Commodity risks can be partially mitigated through
+backward integration of the supply chain. For example,
+partnerships and long-term supply agreements with com-
+modity suppliers can be used to ensure supply of the relevant
+material while also achieving competitive prices.
+reliability monitor the financial situation of our suppliers
+continuously and globally, taking targeted measures to
+counter the risk of possible supply disruptions. Risks in
+battery cell production arise particularly from the rising
+demand for battery cells and the resulting reliance on
+suppliers, from technological change and from the service life
+of battery cells. Additional risks may arise from the long-term
+relation to cell manufacturers and the direct responsibility of
+Volkswagen in the supply chain. To counter these risks, the
+Volkswagen Group maintains multiple strategic supplier
+relationships while also increasing its own battery pro-
+duction within the value chain (raw material extraction, cell
+production).
+Production risks
+Report on Risks and Opportunities 195
+In the case of large projects within the Power Engineering
+Business Area, risks may arise that are often only identified
+over the course of the project. They may result in particular
+from contract design errors, inaccurate or incomplete infor-
+mation used in costing, post-contract changes in economic
+and technical conditions, weaknesses in project manage-
+ment, quality defects and unnoticed product malfunctions in
+product emergence, or poor performance by subcontractors.
+Most notably, omissions at the start of a project, over-
+shooting of the development budget or timeframe, and legis-
+lative changes are usually difficult to correct or compensate
+for and often entail substantial additional expenses. The
+current disproportionate increases in commodity prices and
+limited availability of semiconductor products may have a
+detrimental impact on production costs and revenue recog-
+We endeavor to identify these risks at an early stage and
+to take appropriate measures to eliminate or minimize them
+by constantly optimizing the project control process across
+all project phases and by using a lessons-learned process and
+regular project reviews. We can thus reduce risks, particularly
+during the bidding and planning phase of large upcoming
+projects.
+We address the risk of unauthorized access to, modifi-
+cation of, or extraction of corporate and customer data with
+the use of IT security technologies such as firewall and
+intrusion prevention systems and a multiple-authentication
+procedure. Additionally, we increase protection by restricting
+the allocation of access rights to systems and information
+and by keeping backup copies of critical data resources.
+Redundant IT infrastructures allow us to mitigate risks that
+occur in the event of a systems failure or disaster.
+Economic Commission for Europe) cyber security regulation
+(R155) define the requirements made of our vehicle and
+software development. These also have a large impact on our
+IT systems. We therefore work on an interdisciplinary basis to
+protect our connected vehicles and mobility services. Our
+guiding principles are data security, transparency and infor-
+mational self-determination.
+The high standards we set for the quality of our products
+also apply to the way in which we handle our customers' and
+employees' data. There is a risk of cyber attacks, particularly
+on our digital services that make use of our mobility offer-
+ings. Legal regulations including the UNECE (United Nations
+At Volkswagen, a global, software-centric mobility provider,
+the information technology (IT) used in all business units
+Group-wide is assuming an ever more important role. IT risks
+exist in relation to the three protection goals of confiden-
+tiality, integrity and availability, and comprise in particular
+unauthorized access to, modification of and extraction of
+sensitive electronic corporate or customer data as well as
+limited systems availability as a consequence of downtime
+and disasters. Handling data with integrity is a key factor for
+the accuracy and completeness of data, and for the function-
+ality of error-free systems.
+IT risks
+The Ausschuss Produktsicherheit (APS - Product Safety
+Committee) has been established to comprehensively evalu-
+ate and efficiently resolve product safety risks for customers
+as the product users. In the event of safety defects, doubts
+about compliance with legal requirements, or issues relating
+to the brand or corporate image, the APS examines the
+matter concerned and decides on how to respond. In this
+context, the APS is also responsible for managing related
+inquiries from authorities. The cross-divisional Car Security
+Board (CSB) provides support in relation to cyber security
+issues. We also created central units and established them
+within the organization; these are responsible for managing
+incoming information on APS- and CSB-related topics. In
+2021, a universal, transparent management and tracking
+system was established to follow up on all such information
+across the Group without employee involvement, right
+through to the APS decision. In addition, numerous events
+and training courses were held to improve awareness of
+safety risks and products' legal conformity among all
+employees. These activities aim to avoid risks from a lack of
+timely, complete and correct reporting and preliminary
+analysis. The entire APS process is, moreover, subject to
+regular review in the form of internal and external audits,
+aimed at reducing to a minimum risks arising from delayed,
+lacking or erroneous decisions and measures on the part of
+the APS or CSB.
+brands in the event of an attack so that any weaknesses in our
+products can be promptly eliminated. The Automotive Cyber
+Security Management System is an integral part of our
+quality management system and helps us to take advantage
+of synergies with already existing structures. This approach
+has been taken to meet the legal requirements of the UNECE
+regulation on cyber security, which will apply from mid-2022.
+nition.
+197
+Group Management Report
+With the increasing technical complexity of vehicles due
+to their internal and external connectivity, and the toolkit
+systems in use across brands, the quality of the parts and
+software components supplied must be assured. This is
+lending ever greater importance to cyber security. To better
+monitor and manage the risk of cyber attacks on our vehicles
+in the future, we are establishing an Automotive Cyber
+Security Management System in all Group brands. Harmo-
+nized processes across the Group, such as the car security
+incident process, enable a fast reaction speed across the
+Vehicle registration and operation criteria are defined and
+monitored by national and, in some cases, international
+authorities. Furthermore, several countries have special - and
+in some cases new - rules aimed at protecting customers in
+their dealings with vehicle manufacturers. We have estab-
+lished quality processes so that the Volkswagen Group brands
+and their products fulfill all respective applicable require-
+ments and local authorities receive timely notification of all
+issues requiring reporting. By doing so, we reduce the risk of
+customer complaints or other negative consequences.
+We also check the conformity of series products (con-
+formity of production - COP) in vehicle production plants as
+part of system audits with a CoP component. Further risks are
+associated with discrepancies identified in conformity of
+production (COP) measurements and in-service-conformity
+(ISC) measurements. We have established an effective system
+for monitoring the conformity of CoP and ISC measurements
+for manufactured vehicles. To ensure that the results of the
+emissions CoP and ISC measurements are analyzed system-
+atically, we have defined an IT system throughout the Group
+as the basis for reporting and implemented it across the
+organization. This is used for status reporting and docu-
+menting the results of the series of measurements.
+or externally sourced parts, components or functions may
+necessitate time-consuming and cost-intensive measures and
+lead to recalls and therefore to damage to the Volkswagen
+Group's image. In addition, the resulting financial impacts
+may exceed provisions. To meet our customers' expectations
+and minimize warranty and ex gratia repair costs, we con-
+tinuously optimize the processes at our brands with which
+we can prevent these defects. If quality management is
+ineffective, there is a risk of losing ISO 9001 and KBA certifi-
+cation. This would lead directly to a loss of type approval
+from one or more authorities. We counter this risk by con-
+tinuously training the Group's system auditors and sub-
+jecting our quality management system and process quality
+to internal audits.
+We strive to identify and rectify quality problems at an early
+stage during the development of our products to avoid,
+among other things, delays to the start of production. As we
+are using an increasing number of modular components as
+part of our modular toolkit strategy, it is particularly impor-
+tant when malfunctions do occur to identify the cause
+quickly and eliminate the faults. Nonconformity of internally
+Quality risks
+Report on Risks and Opportunities
+Group Management Report
+Group Management Report
+A global economic slowdown exacerbated by trade
+disputes and especially the consequences of the Covid-19
+pandemic, including sharply increased commodity prices, is
+impacting the financial situation of many suppliers. This is
+also giving rise to risks of bottlenecks and disruption in
+supply.
+However, with higher volumes there is a higher risk that
+supply chain disruption – for example due to a shortage of
+semiconductors or quality problems may affect an
+increasing number of vehicles.
+We are continuously expanding our modular toolkits,
+focusing on future customer requirements, legal require-
+ments and infrastructural requirements.
+Risks and opportunities from the modular toolkit strategy
+We regularly compare the results of all these analyses
+with the respective project targets; in the event of any
+discrepancies, we introduce appropriate countermeasures in
+good time. Our end-to-end project organization fosters
+cooperation across all of the departments involved in the
+process, ensuring that specific requirements are incorporated
+into the development process as early as possible and that
+their implementation is planned in good time.
+To reduce the risk of patent infringements, we conduct
+thorough analyses of third-party industrial property rights;
+increasingly also in relation to communication technologies.
+automated driving, there is a risk of failing to identify rele-
+vant trends early enough to respond accordingly.
+The economic success and competitiveness of the Volks-
+wagen Group depend on how swiftly we are able to tailor our
+portfolio of products and services to changing conditions.
+Given the intensity of competition and speed of technological
+development, for example in the fields of digitalization and
+-
+On a national and international level, there are numerous
+legal requirements regarding the use, handling and storage of
+substances and mixtures (including restrictions concerning
+chemicals, heavy metals, biocides, persistent organic pollut-
+ants). There is therefore a risk of non-conformity in the manu-
+facture, procurement and introduction of products such as
+automobiles or replacement parts.
+Risks arising from research and development
+The most significant risks from the QRP result from the
+inability to develop products in line with demand and require-
+ments, especially with regard to e-mobility and digitalization.
+For this risk category, the likelihood of occurrence is classified
+as high (previous year: high) and the potential extent of
+damage is classified as medium (previous year: medium).
+Research and development risks
+There is a risk that the Covid-19 pandemic could intensify,
+due to reasons such as changes in the virus. All areas of the
+Volkswagen Group are affected by the pandemic. There are
+risks arising in particular from a fall in demand and an
+increasing intensity of competition. In production, there are
+risks especially with regard to stable supply chains and
+protecting the health of our staff. We have put in place
+increased hygiene and protective measures to ensure plants
+can operate.
+-
+and whose repercussions are therefore difficult to control.
+Should these transpire, they could have an adverse effect on
+the further development of the Volkswagen Group. In partic-
+ular, such occurrences include natural disasters, pandemics
+such as the current spread of the SARS-CoV-2 virus-, violent
+conflicts such as the current conflict between Russia and
+Ukraine- and terrorist attacks.
+The automotive industry is undergoing a fundamental trans-
+formation process. For multinational corporations like Volks-
+wagen, this means risks in the areas of customer/market,
+technological advancements and legislation. One risk posed
+is the implementation of ever more stringent emission and
+fuel consumption regulations, such as C6 in China or EU7 in
+Europe from 2025. New test procedures and test cycles (e.g.
+the Worldwide Harmonized Light-Duty Vehicles Test Pro-
+cedure, WLTP) as well as compliance with approval processes
+(homologation) are becoming increasingly complex and
+time-consuming. The test specifications and homologation
+procedures also vary greatly from country to country.
+Government support measures have stabilized the posi-
+tion of suppliers experiencing financial difficulties as a result
+of the pandemic. In Germany, for example, new rules on
+short-time working (Kurzarbeit) and loan support schemes,
+but also the suspension of the obligation to file for insol-
+vency, have prevented companies from becoming insolvent.
+Specialists in Purchasing for restructuring and supply
+The Modular Transverse Toolkit (MQB) is an extremely
+flexible vehicle architecture that was created to allow con-
+ceptual dimensions - such as the wheelbase, track width,
+wheel size and seat position - to be harmonized throughout
+the Group and utilized flexibly. Other dimensions, for
+example the distance between the pedals and the middle of
+the front wheels, are always the same, ensuring a uniform
+system in the front of the car. Thanks to the resulting synergy
+effects, we are able to cut both development costs and the
+necessary one-time expenses as well as manufacturing times.
+The toolkits also allow us to produce different models from
+different brands in varying quantities, using the same equip-
+ment in a single plant. This means that our capacities can be
+used with greater flexibility throughout the entire Group,
+enabling us to achieve efficiency gains.
+Report on Risks and Opportunities
+There is also the risk that the latest developments in the
+Russia-Ukraine conflict will have a negative impact on the
+supply chain and lead to supply bottlenecks.
+There is a risk of bottlenecks or disruption in supply, as is
+currently being seen in the case of semiconductor com-
+ponents. Here, the rapid recovery in demand starting in the
+fourth quarter of 2020, following the pandemic-induced drop
+in production and sales volumes in the first half of 2020, and
+the insufficient market capacity of the semiconductor
+industry combined with high demand from the consumer, IT
+and telecommunications industries, led to bottlenecks in
+supply. We intend to safeguard supplies for our production
+plants by implementing short-term measures along with the
+use of our relationship management and monitoring across
+the entire supply chain.
+Risks and opportunities from Purchasing and Technology
+Current trends in the automotive industry such as e-mobility
+and automated driving are resulting in an increased need for
+financing among suppliers, presenting them with consider-
+able challenges. These are being exacerbated by the current
+commodity price situation and the unavailability of semi-
+conductors. The supplier risk management system in Pur-
+chasing at the Volkswagen Group evaluates suppliers before
+they are commissioned to carry out projects. Purchasing
+takes into account the recommendations of the risk manage-
+ment system.
+suppliers and supply and transport chains, finding
+alternatives where suppliers are unavailable and organizing
+special processes. Vehicle programs and production processes
+can be adjusted dynamically. As part of the Safe Production
+Initiative, we have defined hygiene measures to prevent
+possible chains of infection at essential points of contact
+between the people working in the network. These measures
+will be adjusted if necessary and include physical distancing,
+wearing of protective masks, cleaning and disinfecting, and
+reorganizing shift models and staggering break times.
+Countermeasures to stabilize global production include,
+for example, observing the spread of infection and the mea-
+sures taken to contain the pandemic, analyzing the impact on
+Due to the uncertainty arising from the further develop-
+ment of the Covid-19 pandemic and a significant shortage of
+semiconductor capacity throughout the automotive industry,
+there is a risk that looming supply breakdowns may not be
+recognized early enough and that countermeasures may not
+be initiated in time to maintain production.
+Supply risks are generally identified in Purchasing
+through early warning systems and mitigated by applying
+corresponding measures to safeguard supply and avert future
+assembly line stoppages caused by suspensions of deliveries.
+Further methods of counteracting such risks include fire
+protection measures and hazardous goods management, and,
+where financially viable, ensuring that they are covered by
+insurance policies.
+194
+as the current conflict between Russia and Ukraine - fires,
+explosions, or the leakage of substances hazardous to health
+and/or the environment, may result in supply risks in
+purchasing and significantly impair production. As a conse-
+quence, bottlenecks or even outages in production may
+occur, thus preventing the planned volume of production
+from being achieved.
+Particular events beyond our control such as natural
+disasters, pandemics – currently the spread of the SARS-COV-2
+virus
+Risks from particular events in the Volkswagen Group's purchasing
+and production network
+The most significant risks from the QRP lie particularly in
+volatile procurement markets, here primarily in relation to
+the availability of semiconductors, as well as in cyber security
+and new regulatory requirements regarding IT, and in quality
+problems.
+For this risk category, the likelihood of occurrence is classified
+as high (previous year: high) and the potential extent of
+damage is classified as medium (previous year: medium).
+Operational risks and opportunities
+We have also transferred this principle of standardization
+with maximum flexibility to the Modular Electric Drive
+Toolkit (MEB) and Premium Platform Electric (PPE), concepts
+developed for all-electric drives. The synergy effects and
+efficiency gains offered by the modular toolkit strategy are
+enabling us to bring e-mobility into mass production
+worldwide with the introduction of the first MEB- and PPE-
+based vehicles. In future, we will reinforce these synergy
+effects by combining the MEB and PPE in the Scalable
+Systems Platform (SSP).
+Group Management Report
+or other events such as violent confrontations - such
+Demand for resources, possible speculations on the
+market and current trends in the automotive industry, such
+as the growing share of electrified vehicles, may affect the
+availability and prices of certain raw materials. Trends in raw
+materials and demand are continuously analyzed and
+assessed on an interdisciplinary basis to enable steps to be
+taken at an early stage in the event of potential bottlenecks.
+Report on Risks and Opportunities 189
+Risks from media impact
+198
+The image of the Volkswagen Group and its brands is one of
+the most important assets and forms the basis for long-term
+business success. Our policy and strategic orientation on
+issues such as integrity, ethics, sustainability and climate
+protection are in the public focus. One of the basic principles
+of running our business is therefore to pay particular atten-
+tion to compliance with legal requirements and ethical prin-
+ciples. However, we are aware that misconduct or criminal
+acts by individuals and the resulting reputational damage
+can never be fully prevented. In addition, media reactions can
+have a negative effect on the image of the Volkswagen Group
+and its brands. This impact could be amplified through
+insufficient communication at times of crisis.
+Volkswagen complements these technical measures by
+systematically raising awareness and providing training for
+employees.
+Another focus is the continuous enhancement of Group-
+wide security measures with modern technologies and tools,
+such as the further expansion of the IT security command
+center for the early detection of and defense against cyber
+attacks.
+The further development and Group-wide use of IT gover-
+nance processes, particularly the further standardization of
+the IT risk management process, also help to identify weak-
+nesses at an early stage and to reduce or avoid risks effec-
+tively.
+We use commercially available technologies to protect
+our IT landscape, adhering to standards applicable through-
+out the Company. We future-proof our IT through continual
+standardization and updates. Continuously increasing auto-
+mation enhances process reliability and the quality of pro-
+cessing.
+A newly established committee with members from
+Information Security, Data Protection, Group Security, Legal
+Affairs and other stakeholders handles interdisciplinary
+issues on information security and reports directly to the
+Group Board of Management. This allows faster and more
+efficient coordination in challenging situations, thus
+increasing the overall level of security. A wide range of aware-
+ness-raising measures and training courses for employees
+also helps create and deepen consciousness of information
+security.
+Environmental and social risks
+For this risk category, the likelihood of occurrence is classified
+as high (previous year: medium) and the potential extent of
+damage is classified as medium (previous year: medium).
+The most significant risks from the QRP arise from non-
+fulfillment of CO2-related requirements.
+Personnel risks
+-
+We use a range of instruments to counter economic risks as
+well as changes in the market and the competitive situation
+and shortages of supplier components. These help the Volks-
+wagen Group to remain flexible in terms of staff deployment
+when faced with a fluctuating order situation whether
+orders are in decline, or there is an increase in demand for
+our products. These instruments include time accounts to
+which hours are added when overtime is necessary and from
+which hours are deducted in quiet periods, enabling our
+factories to adjust their capacity to production volume with
+measures such as extra shifts, closure days, flexible shift
+models and legally regulated instruments such as Kurzarbeit
+(short-time working). The use of temporary workers also
+allows us to be more flexible in our planning. All of these
+measures help the Volkswagen Group to generally maintain a
+stable permanent workforce, even when orders fluctuate.
+The technical expertise and individual commitment of
+employees are indispensable prerequisites for the success of
+the Volkswagen Group. We counter the risk of not being able
+to develop sufficient expertise in the Company's different
+vocational groups with our strategically oriented and holistic
+human resource development, which gives all employees
+attractive training and development opportunities. By
+boosting our training programs, particularly at our interna-
+tional locations, we are able to adequately address the
+challenges of technological change and the structural trans-
+formation of the automotive industry.
+To counter the potential risk of a shortage of skilled
+specialists - especially in the areas of digitalization and IT-
+we continuously expand our recruitment tools. Our system-
+atic talent relationship management, for example, enables us
+to make contact with talented candidates from strategically
+relevant target groups at an early stage and to build a long-
+term relationship between them and the Group. In addition
+to the standard dual vocational training, programs such as
+our integrated degree Studium im Praxisverbund and trainee-
+ship scheme, Faculty 73 and the Volkswagen-sponsored non-
+profit École 42 in Wolfsburg and Berlin, ensure a pipeline of
+highly qualified and motivated employees. By systematically
+increasing our attractiveness as an employer, we are able to
+gain talented people in areas that are crucial for the future,
+such as electrical engineering, chemistry or information
+technology. With tools such as these, we want to ensure that
+our demand for qualified new staff is covered, even amid a
+shortage of skilled labor.
+Report on Risks and Opportunities
+Group Management Report
+Group Management Report
+The advancing digitalization of our human resources
+processes entails risks arising from the processing of
+personal data, but also system-based improvements so that
+Volkswagen can ensure compliance with data protection laws
+when processing personal data. Volkswagen is aware of its
+responsibility in the processing of this data. To make pro-
+cessing compliant with data protection requirements, we
+address risks as part of our data protection management
+system by implementing a wide range of measures. A chal-
+lenge lies in the conflict between requests for information in
+the context of various US agreements entered into in con-
+nection with the diesel issue on the one hand and both
+German and international data protection requirements on
+the other. This is true particularly in view of the fact that
+these data protection requirements are open to a certain
+degree of interpretation and assessment. In the interest of
+precluding infringements of the law as far as possible, despite
+a partially unclear legal situation, Volkswagen is advised by
+external law firms on these issues.
+We counter the risks associated with employee fluctu-
+ation and loss of knowledge as a result of retirement with
+intensive, department-specific succession planning and
+training. We have also established a base of senior experts in
+the Group. With this instrument, we use the valuable know-
+ledge of our experienced specialists who have retired from
+Volkswagen.
+The spread of the SARS-CoV-2 virus has had a negative
+impact on business development since fiscal year 2020. Any
+infectious diseases occurring in the future may also pose a
+risk of high infection rates among the workforce, resulting in
+process disruptions in production and non-production areas,
+for example production stoppages. In the event of the future
+spread of such diseases, emergency plans to tackle this risk
+for the purpose of business continuity management will be
+developed for critical processes, based on our experience to
+date, and incorporated into the risk management systems.
+Moreover, additional administrative proceedings relating
+to the diesel issue are ongoing in other jurisdictions.
+The companies of the Volkswagen Group are cooperating
+with the government authorities.
+Risks may furthermore result from possible decisions by
+the European Court of Justice construing EU type approval
+provisions.
+2. Product-related lawsuits worldwide (excluding the USA/
+Canada)
+A general possibility exists 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 environ-
+mental organizations to bring suit to enforce alleged rights to
+injunctive relief, declaratory judgment, or damages.
+Customer class action lawsuits and actions brought by
+consumer and/or environmental organizations are pending
+against Volkswagen AG and other Volkswagen Group com-
+panies in a number of countries including Belgium, Brazil,
+204
+Report on Risks and Opportunities
+Group Management Report
+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 Volks-
+wagen'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
+less than 10%.
+Group Management Report
+As the type approval authority of proper jurisdiction, the
+KBA is moreover continuously testing Audi, Volkswagen, 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.
+Group Management Report
+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 (NOx) emis-
+sions had been discovered in emissions tests on certain
+Volkswagen Group vehicles with 2.01 diesel engines in the
+USA. In this context, Volkswagen AG announced that notice-
+able discrepancies between the figures recorded in testing
+and those measured in actual road use had been identified in
+type EA 189 diesel engines and that this engine type had been
+installed in roughly eleven million vehicles worldwide. 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 3.01 diesel
+engines.
+The so-called 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. This soft-
+ware function was developed and implemented from 2006 on
+without knowledge at the level of the Board of Management.
+Members of the Board of Management did not learn of the
+development and implementation of this software function
+until the summer of 2015.
+There are furthermore no findings that, following the
+publication in May 2014 of the study by the International
+Council on Clean Transportation, an unlawful “defeat device"
+under US law was disclosed to the persons responsible for
+preparing the 2014 annual and consolidated financial state-
+ments as the cause of the high NOx emissions in certain US
+vehicles with 2.01 type EA 189 diesel engines. Rather, at the
+time the 2014 annual and consolidated financial statements
+were being prepared, the persons responsible for preparing
+these financial statements remained under the impression
+that the issue could be resolved with comparatively little
+expense. In the course of the summer of 2015, however, it
+became progressively 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 that was later identified as
+an unlawful "defeat device" as defined by US law. This
+culminated in Volkswagen's disclosure of a “defeat device" to
+the EPA and the California Air Resources Board, a department
+of the Environmental Protection Agency of the State of Cali-
+fornia, on September 3, 2015. According to the assessment at
+the time by the responsible persons dealing with the matter,
+the magnitude of the costs expected to result for the Volks-
+wagen Group (recall costs, retrofitting costs, and financial
+penalties) was not fundamentally dissimilar to that in
+previous cases involving other vehicle manufacturers. It
+therefore appeared to be manageable overall considering the
+business activities of the Volkswagen Group. This assessment
+by Volkswagen AG was based, among other things, on the
+advice of a law firm engaged in the USA for regulatory
+approval issues, according to which similar cases had in the
+past been amicably resolved with the US authorities. The
+EPA's publication of the "Notice of Violation" on Septem-
+ber 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 3.01 TDI engines until the
+EPA issued its November 2015 "Notice of Violation."
+Within the Volkswagen Group, Volkswagen AG has devel-
+opment 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 1 and V8 4.2 1 diesel engines.
+As a consequence of the diesel issue, numerous judicial
+and regulatory proceedings were initiated in various coun-
+tries. Volkswagen has in the interim 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. The agreements in question include
+various partial consent decrees as well as a plea agreement
+that 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. Although Volkswagen is
+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.
+In agreement with the respective responsible authorities,
+the Volkswagen Group is making technical measures avail-
+able worldwide for virtually all diesel vehicles with type
+EA 189 engines. For all clusters (groups of vehicles) within its
+jurisdiction, the Kraftfahrt-Bundesamt (KBA - German Federal
+Motor Transport Authority) determined that implementation
+of the technical measures would not result in any adverse
+changes in fuel consumption, CO2 emissions, engine output,
+maximum torque, and noise emissions.
+England and Wales, France, Germany, Italy, the Netherlands,
+Portugal, and South Africa. Alleged rights to damages and
+other relief are asserted in these actions. The pending actions
+include in particular the following:
+Group Management Report
+Following the studies carried out by AUDI AG to check all
+relevant diesel concepts for possible irregularities and retrofit
+potential, 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. AUDI AG
+continues to anticipate that the total cost, including recall
+expenses, 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 updates in the vehicles of a large
+number of affected customers. The few software updates still
+being developed are expected to be submitted to the KBA for
+approval early in the second quarter of 2022.
+In connection with the diesel issue, potential conse-
+quences for Volkswagen's results of operations, financial
+position and net assets could emerge primarily in the
+following legal areas:
+1. Criminal and administrative proceedings worldwide
+(excluding the USA/Canada)
+Criminal investigations, regulatory offense proceedings,
+and/or administrative proceedings have been commenced in
+some countries. Criminal investigations into the core factual
+issues are being conducted by the Offices of the Public
+Prosecutor in Braunschweig and Munich.
+In January 2021, the criminal proceedings regarding
+alleged market manipulation relating to capital market
+disclosure obligations in connection with the diesel issue
+were terminated by the Braunschweig Regional Court
+provisionally as regards the former Chair of the Board of
+Management and definitively as regards Volkswagen AG.
+In September 2020, the Braunschweig Regional Court
+allowed the indictment of the same former Chair of the Board
+of Management of Volkswagen AG and others to proceed on
+charges that include fraud in connection with the diesel issue
+involving type EA 189 engines. The proceedings against this
+former Chair of the Board of Management of Volkswagen AG
+have since been severed from the other cases. The trial of the
+other defendants began in September 2021.
+The Braunschweig Office of the Public Prosecutor is
+furthermore conducting investigations on suspicion of fraud
+in connection with type EA 288 engines.
+In June 2020, the Munich II Regional Court accepted the
+substantially unchanged indictment of the Munich II Office
+of the Public Prosecutor, which also names a former Chair of
+the Board of Management of AUDI AG, and opened the main
+trial proceedings on charges of, among other things, fraud in
+connection with the diesel issue involving 3.01 and 4.21 TDI
+engines. Trial proceedings commenced in September 2020.
+In August 2020, the Munich II Office of the Public Prosecutor
+issued a further indictment charging three former members
+of the Board of Management of AUDI AG and others with,
+among other things, fraud in connection with the diesel issue
+involving 3.01 and 4.2 1 TDI engines.
+In connection with the diesel issue, the Stuttgart Office of
+the Public Prosecutor is conducting a criminal investigation
+on suspicion of fraud and illegal advertising; this investi-
+gation also involves a member of the Board of Management
+of Dr. Ing. h.c. F. Porsche AG.
+Report on Risks and Opportunities 203
+In Australia, two civil suits filed against Volkswagen AG
+and other Group companies by the Australian Competition
+and Consumer Commission (ACCC) were settled for the sum
+of AUD 75 million in the second half of 2019. On appeal, the
+amount of the settlement was increased to AUD 125 million
+by final judicial ruling in the reporting year.
+In Germany, roughly 60 thousand individual lawsuits
+relating to various diesel engine types are currently pending
+against Volkswagen AG or other Group companies, with the
+plaintiffs suing for damages or rescission of the contract in
+In Brazil, two consumer protection class actions are
+pending. The first of these class actions pertains to some
+17 thousand Amarok vehicles and the second to roughly
+67 thousand later generation Amaroks. In the first class
+action, an appeals judgment was rendered in May 2019 that
+only partially upheld the lower court's decision. This judg-
+ment initially reduced the damage liability of Volkswagen do
+Brasil considerably to around BRL 172 million. 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 appeals judgment
+remains non-final since Volkswagen do Brasil has appealed it
+to a higher court. The second class action was dismissed as
+inadmissible in October 2021. The judgment is appealable.
+The financialright GmbH filed consolidated actions before
+various German courts asserting claims assigned to it by
+customers in Germany, Slovenia, and Switzerland against
+Volkswagen Group companies. Following the withdrawal of
+numerous motions for relief, approximately 36 thousand
+claims are currently still pending. Some cases have in the
+meantime moved to the first or second appeals level. There is,
+however, as yet no high court ruling on the permissibility of
+the business model of financialright GmbH.
+Further investor lawsuits have been filed with the
+Stuttgart Regional Court against Volkswagen AG, in some
+cases along with Porsche SE as joint and several debtor. A
+further investor action for model declaratory judgment is
+pending before the Stuttgart Higher Regional Court against
+Porsche SE; Volkswagen AG is involved in this action as a
+third party intervening in support of a party to the dispute.
+The Wolverhampton City Council, Administrating Authority
+for the West Midlands Metropolitan Authorities Pension
+Fund, has been appointed model case plaintiff. Oral argu-
+ment in this case began in July 2021 and is to be continued.
+206
+Report on Risks and Opportunities
+Group Management Report
+In the Netherlands, an unquantified action filed by a
+shareholder association seeking a determination that Volks-
+wagen AG had supposedly misled the capital markets was
+withdrawn in early July 2021 after the European Court of
+Justice held that the courts of the Netherlands lacked
+international jurisdiction in a similar case. Volkswagen AG
+consented to the withdrawal of the action. This terminated
+the litigation without precluding the filing of subsequent
+lawsuits.
+Excluding the United States and Canada and following the
+withdrawal of various actions, claims in connection with the
+diesel issue totaling roughly €9.5 billion are currently
+pending worldwide against Volkswagen AG in the form of
+investor lawsuits, judicial applications for dunning and
+conciliation procedures, and claims under the KapMuG.
+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. Contingent
+liabilities have been disclosed where the chance of success
+was estimated to be not less than 10%.
+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 law-
+suits and requests for information that have been filed
+against Volkswagen AG and other Volkswagen Group com-
+panies, in particular by customers, investors, salespersons,
+and various government agencies in Canada and the United
+States, including the attorneys general of several US states.
+The Texas attorney general and some municipalities
+continue to pursue actions in state and federal courts against
+Volkswagen AG, Volkswagen Group of America, Inc., and
+certain affiliates, alleging violations of environmental laws.
+In January 2022, the Texas Supreme Court granted the
+February 2021 petition of the State of Texas for review of the
+Texas appellate court decision that had dismissed the
+environmental claims of Texas against Volkswagen AG and
+AUDI AG for lack of personal jurisdiction.
+In November 2021, the US Supreme Court denied
+petitions by Volkswagen requesting that it reviews both a
+decision by the US Court of Appeals for the Ninth Circuit
+declining to dismiss certain claims brought by Hillsborough
+County, Florida, and Salt Lake County, Utah, and a decision by
+the Ohio Supreme Court declining to dismiss certain claims
+brought by the State of Ohio.
+In the reporting year and in early 2022, Volkswagen
+settled the environmental claims brought by Montana and
+New Hampshire (in September 2021), Illinois (in December
+2021), and Ohio (in January 2022).
+In March 2019, the US Securities and Exchange Com-
+mission (SEC) filed a lawsuit against, among others, Volks-
+wagen AG, Volkswagen Group of America Finance, LLC, and
+VW Credit, Inc., 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. In August 2020, the US
+District Court for the Northern District of California granted
+in part and denied in part Volkswagen's motion to dismiss.
+The claims dismissed by the court included all claims against
+VW Credit, Inc. related to asset-backed securities. In Septem-
+ber 2020, the SEC filed an amended complaint that, among
+other things, removed the dismissed claims.
+As to private civil law matters, in an environmental class
+action lawsuit seeking punitive damages on behalf of the
+residents of the Province of Quebec, after authorizing the
+case to proceed as a class, a Quebec court ruled in October
+2020 that issues raised as to the viability of plaintiffs'
+damages theory should be deferred until trial. On that basis,
+the court denied a motion to dismiss by Volkswagen. Sub-
+sequently, Volkswagen settled the case. The settlement is
+subject to court approval, which is currently pending.
+In line with IAS 37.92, no statements have been made
+concerning estimates of financial impact or regarding
+uncertainty as to the amount or maturity of provisions and
+contingent liabilities in relation to proceedings in the USA/
+Canada. This is so as to not compromise the results of the
+proceedings or the interests of the Company.
+The vast majority of these investor lawsuits are currently
+pending before the Braunschweig Regional Court. In August
+2016, the Braunschweig Regional Court issued an order
+referring common questions of law and fact relevant to the
+investor lawsuits pending before it to the Higher Regional
+Court in Braunschweig for binding declaratory rulings pursu-
+ant to the Kapitalanleger-Musterverfahrensgesetz (KapMuG –
+German Capital Investor Model Declaratory Judgment Act). In
+this proceeding, common questions of law and fact relevant
+to these actions are to be adjudicated by the Braunschweig
+Higher Regional Court in a single consolidated proceeding
+(model case proceedings). The lawsuits filed with the Braun-
+schweig Regional Court are 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 the pending cases that have been
+stayed as described. The model case plaintiff is Deka Invest-
+ment GmbH. Oral argument in the model case proceedings
+before the Braunschweig Higher Regional Court began in
+September 2018 and is continuing at subsequent hearings.
+The latest indication from the court was that it may take
+evidence on certain points.
+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. Given the opt-out rule,
+the class action potentially covers all vehicles with type
+EA 189 engines purchased by consumers on the Belgian
+market after September 1, 2014, unless the right to opt out is
+actively exercised. The asserted claims are based on pur-
+ported violations of unfair competition and consumer
+protection law as well as on alleged breach of contract.
+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.
+At this time, it cannot be estimated how many customers
+will choose to file lawsuits in the future in addition to those
+already pending and what prospect of success such lawsuits
+might have.
+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 91 thousand plaintiffs have
+registered claims under the group litigation, for which the
+opt-in period has expired. Further plaintiff law firms have
+registered roughly 105 thousand additional claims with the
+court. The question of liability on the part of Volkswagen was
+not among the preliminary issues that the High Court
+decided in April 2020 and will be dealt with at a later stage of
+the proceedings. The main trial proceedings are to begin in
+January 2023. In addition, in late 2021 a new lawsuit was filed
+in court against Volkswagen AG, Volkswagen Financial Ser-
+vices (UK) Limited, and other Volkswagen Group companies
+in connection with certain diesel vehicles leased or sold in
+England, Wales, and Northern Ireland since 2009 and various
+other diesel engine types.
+In France, a class action is pending that was filed by the
+French consumer organization Confédération de la Consom-
+mation, du Logement et du Cadre de Vie (CLCV) against Volks-
+wagen Group Automotive Retail France and Volkswagen AG
+for up to 1 million French owners and lessees of vehicles with
+type EA 189 engines. This is an opt-in class action.
+In Italy, a trial level judgment in favor of the plaintiffs was
+rendered by the Venice Regional Court in July 2021 in the
+class action brought by the consumer association Altro-
+consumo on behalf of Italian customers; the judgment
+requires Volkswagen AG and Volkswagen Group Italia to pay
+damages to some 63 thousand consumers in an aggregate
+amount of roughly € 185 million. Volkswagen AG and Volks-
+wagen Group Italia have appealed this decision.
+In the Netherlands, an opt-out class action is pending that
+was brought by Stichting Volkswagen Car Claim seeking
+declaratory rulings for up to 165 thousand customers. A
+declaratory judgment partially granting the relief sought was
+issued in July 2021. In the opinion of the court, Volks-
+wagen AG and the other defendant Group companies acted
+unlawfully with respect to the original engine management
+software. The court moreover held that consumers are
+entitled to a purchase price reduction from the defendant
+dealerships. No specific payment obligations result from the
+declaratory judgment. Any individual claims would then have
+to be established afterwards in separate proceedings. Volks-
+wagen AG and the other defendant Group companies have
+appealed the decision. Furthermore, an opt-out class action
+lawsuit brought by the Diesel Emissions Justice Foundation
+seeking monetary damages on behalf of Dutch consumers is
+also pending. It currently remains unclear whether other
+consumers in addition to those in the Netherlands may join
+this class action. The class action relates to vehicles with type
+EA 189 engines, among others.
+Group Management Report
+Report on Risks and Opportunities 205
+In Portugal, a Portuguese consumer organization has filed an
+opt-out class action. The class action potentially affects up to
+approximately 99 thousand vehicles with type EA 189
+engines. 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 thou-
+sand 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 these lawsuits
+are seeking damages or rescission of the purchase contract.
+Report on Risks and Opportunities
+most cases.
+In 2020, the Bundesgerichtshof (BGH - Federal Court of
+Justice) issued a series of fundamental judgments deciding
+legal issues of major importance for the litigation still
+pending with regard to vehicles with type EA 189 engines.
+The BGH held that buyers who had purchased vehicles prior
+to public disclosure of the diesel issue had damage claims
+against Volkswagen AG. While buyers can require reimburse-
+ment of the purchase price paid, they must accept a
+deduction for the benefit derived from using the vehicle and
+must return it to Volkswagen AG. Buyers have no tort-based
+claim for damages if they purchased their vehicles after the
+ad hoc announcement of September 22, 2015 or if they raise
+claims based solely on a temperature-dependent emissions
+control feature (so-called thermal window) in the engine. In
+February 2022, the BGH issued further fundamental judg-
+ments concerning vehicles with EA 189 motors deciding that
+buyers of new vehicles of the Volkswagen brand were entitled
+to so-called residual damage claims against Volkswagen AG
+after the knowledge-based limitation period has expired. As a
+result, Volkswagen AG has to repay the purchase price of the
+vehicle or the price paid by the dealer. The BGH decided that
+the claims for residual damages do not extend beyond claims
+of ordinary damages. Buyers need to subtract the value of
+usage and can only demand payment of the residual damages
+if they in return relinquish the vehicle. Prior to this the BGH
+had decided that, in contrast, buyers of used vehicles are not
+entitled to residual damages.
+Volkswagen estimates the likelihood that the plaintiffs
+will prevail to be 50% or less in the great majority of cases:
+customer class actions, complaints filed by consumer and/or
+environmental organizations, and individual lawsuits. Con-
+tingent 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
+remote. Given the early stage of the proceedings, it is in many
+cases not yet possible to quantify the realistic risk exposure.
+Furthermore, provisions were recognized to the extent
+necessary based on the current assessment.
+3. Lawsuits filed by investors worldwide (excluding the USA/
+Canada)
+202
+As regards stationary equipment, there are a number of
+national rules in place worldwide that limit permitted
+emissions. On December 18, 2008, the World Bank Group set
+limits for gas and diesel engines in its Environmental, Health,
+and Safety Guidelines for Thermal Power Plants, which are
+required to be applied in countries that have adopted no
+national requirements of their own, or requirements that are
+less strict than those of the World Bank Group. These guide-
+lines are currently being revised. In addition, the United
+Nations adopted the Convention on Long-range Trans-
+boundary Air Pollution back in 1979, setting limits on total
+emissions as well as nitrogen oxide for the signatory states
+(including all EU states, other countries in Eastern Europe, the
+USA and Canada). Enhancements to the product portfolio in
+the Power Engineering segment focus on improving the
+efficiency of equipment and systems.
+Appropriate insurance has been taken out to cover these risks
+where they were sufficiently definite and such coverage was
+economically sensible. Where necessary based on the infor-
+mation currently available, identified and correspondingly
+measurable risks have been reflected by recognizing provi-
+sions in amounts considered appropriate or disclosing con-
+tingent liabilities, as the case may be. 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 or by provisions cannot be ruled out. This
+is, for instance, the case with regard to the legal risks assessed
+in connection with the diesel issue.
+Furthermore, antitrust lawsuits seeking damages have been
+received from customers. As is the case in any antitrust pro-
+ceedings, this may result in further lawsuits for damages. No
+provisions have been recognized or contingent liabilities dis-
+closed for these cases as most of them are still in an early stage
+and currently cannot be assessed for this reason. In other
+cases, the chance of a decision by a court of last resort that
+awards damages against MAN or Scania currently appears
+remote.
+In April 2019, the European Commission issued an initial
+statement of objections to Volkswagen AG, AUDI AG, and
+Dr. Ing. h.c. F. Porsche AG in connection with the Commis-
+sion's antitrust investigation of the automobile industry.
+These objections stated the European Commission's pre-
+liminary evaluation of the matter and afforded the oppor-
+tunity to comment. Following entry into a formal settlement
+procedure, in April 2021 the Commission issued a revised
+statement of objections raising charges that were consid-
+erably more narrow. On this basis, a settlement decision was
+issued on July 8, 2021 concluding the administrative action
+and assessing a total fine of roughly € 502 million against the
+three brands. The subject matter scope of the decision is
+limited to the cooperation of German automobile manufac-
+turers on individual technical questions in connection with
+the development and introduction of SCR (selective catalytic
+reduction) systems 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. Volkswagen accepted the decision,
+which was served on July 12, 2021, and filed no appeal, thus
+allowing the decision to become final.
+The Korean competition authority KFTC is analyzing
+potential violations based on the facts of the EU case. The
+final report of the KFTC's appointed case handler was issued
+in November 2021. Volkswagen, Audi, and Porsche will reply
+to this report. The Turkish competition authorities, who
+investigated similar matters, issued a final decision in
+January 2022 in which they determined anticompetitive
+behavior to allegedly exist, but found that it had no effect on
+Turkey, for which reason they refrained from imposing fines
+on the German automakers. Volkswagen, Audi, and Porsche
+are currently considering whether to file an appeal. Based on
+comparable matters, the Chinese competition authority has
+instituted proceedings against Volkswagen, Audi, and
+Porsche, among others, and issued requests for information.
+In October 2020, the US District Court for the Northern
+District of California dismissed two antitrust class action
+The debate around driving bans for diesel vehicles in
+Germany has lost some of its heat given the strong improve-
+ments in air quality measurements. There was a significant
+reduction in the number of municipalities and cities that
+failed to comply with the air pollutant limits for nitrogen-
+dioxide (NO2) immissions in 2021. In some cases, these issues
+have been, and continue to be, the subject of legal pro-
+ceedings. Individual cities throughout Germany have already
+imposed zonal traffic bans for older vehicles such as Euro
+4/IV diesel. It is argued that only driving bans for diesel
+vehicles can bring about the necessary short-term reduction
+in NO2 immissions. The aforementioned debate could
+negatively affect sales of diesel vehicles and result in financial
+liabilities and possible official requirements.
+As part of the European Green Deal, the European Com-
+mission has presented its 2030 Climate Target Plan, which
+sets out to reduce CO2 emissions in the EU by at least 55%
+(previously 40%) compared to 1990 levels by 2030. Various of
+the above-mentioned regulations and directives are currently
+being revised within this framework to support the achieve-
+ment of climate targets. This may lead to even more stringent
+requirements for CO2 emissions (fleet limits) for the auto-
+motive industry.
+In September 2017, the European Commission fined
+Scania €0.88 billion. Scania appealed to the European Court
+of Justice in Luxembourg and mounted a comprehensive
+defense. In a judgment rendered in February 2022, the Euro-
+pean General Court (Court of First Instance) rejected Scania's
+appeal in its entirety. Scania is currently analyzing the judg-
+ment and will in timely fashion decide whether to appeal it to
+the European Court of Justice. Scania had already recognized
+a provision of € 0.4 billion in 2016 and increased this
+provision to approximately €0.9 billion in the reporting year.
+nologies. We are therefore making substantial investments in
+climate-friendly alternative drives- especially battery-electric
+commercial vehicles (trucks and buses).
+Commercial vehicles are increasingly subject to ever stricter
+environmental regulations all around the world, particularly
+to regulations relating to climate change and vehicle emis-
+sions. With Regulation (EU) 2019/1242 of June 20, 2019,
+which specifies CO2 emission standards for new heavy trucks
+with a permitted gross weight of over 16 tonnes, the EU has
+set heavy commercial vehicle manufacturers very ambitious
+targets for reducing CO2 emissions within the next decade.
+The CO2 emissions from such vehicles must be reduced by
+15% by 2025 and 30% by 2030 compared to a reference value
+for a monitoring period from July 2019 to June 2020. If
+emissions exceed these targets, vehicle manufacturers will be
+liable to substantial premiums, amounting to €4,250 per
+excess gram of CO2/tonne-kilometer (tkm) per vehicle for the
+period from 2025 to 2029 and €6,800 per excess gram of
+CO2/tkm per vehicle for the period from 2030 onward.
+> The revised Energy Taxation Directive 2003/96/EC
+updating the minimum tax rates for all energy products
+and electricity
+> The Renewable Energy Directive (RED) (2009/28/EC) intro-
+ducing sustainability criteria; the follow-up regulation
+(RED2) contains higher quotas for advanced biofuels
+> The Fuel Quality Directive (FQD) 2009/30/EC updating the
+fuel quality specifications and introducing energy effi-
+ciency specifications for fuel production
+> The Car Labeling Directive 1999/94/EC
+The other main EU regulations affecting the automotive
+industry include:
+The review of the requirements on CO2 emissions for
+heavy commercial vehicles planned in the EU for 2022 could
+additionally toughen these challenges. Meeting these EU
+targets requires reducing CO2 emissions through new tech-
+In 2011, the European Commission conducted searches at
+European truck manufacturers for suspected unlawful
+exchange of information during the period from 1997 to
+2011; in November 2014, the Commission issued a statement
+of objections to MAN, Scania, and the other truck manufac-
+turers concerned. In its settlement decision of July 2016, the
+European Commission assessed fines against 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 Brazil, the Brazilian tax authorities commenced tax pro-
+ceedings against MAN Latin America; at issue in these
+proceedings are the tax consequences of the acquisition
+structure chosen for MAN Latin America in 2009. In Decem-
+ber 2017, an adverse administrative appeal ruling was
+rendered against MAN Latin America. MAN Latin America
+challenged this ruling before the regular court in 2018.
+Estimation of the risk in the event the tax authorities prevail
+on all points is subject to uncertainty because of differences
+in the amount of penalties and interest that might then apply
+under Brazilian law. However, a positive outcome for MAN
+Latin America remains the expectation. Should this not
+occur, a risk of about BRL 3.2 billion could result for the
+contested period from 2009 onwards; this amount has been
+included in contingent liabilities in the notes.
+case proceedings under the KapMuG. At the first hearing in
+October 2017, the court already indicated that it currently
+sees no justification for claims against Volkswagen AG, both
+because the pleadings are not sufficiently specific and for
+substantive legal reasons. Volkswagen AG sees the court's
+statements as confirmation that the claims against the
+Company are absolutely baseless. The Higher Regional Court
+has yet to render a decision. Further hearings are scheduled
+for 2022.
+Report on Risks and Opportunities
+207
+grounds of age. In April 2020, the Celle Higher Regional Court
+issued a ruling appointing a different special auditor. Volks-
+wagen AG has filed a constitutional complaint with the
+Federal Constitutional Court contesting this formally unap-
+pealable decision as well on grounds of infringement of its
+constitutional rights and has suggested joinder of this matter
+with its initial constitutional complaint against the decision
+to appoint the special auditor. It is currently unclear when the
+Federal Constitutional Court will rule on the two consti-
+tutional complaints. The constitutional complaints have no
+suspensory effect.
+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. Damage settlements
+At the end of March 2021, the Supervisory Board of Volks-
+wagen AG announced the completion of the investigation
+initiated in October 2015 into the causes of and those
+responsible for the diesel issue. The Board resolved to claim
+damages from Prof. Dr. Martin Winterkorn, former Chair of
+the Board of Management of Volkswagen AG, and from
+Rupert Stadler, former member of the Board of Management
+of Volkswagen AG and former Chair of the Board of Man-
+agement of AUDI AG, for breach of their duty of care under
+stock corporation law. The resolution was based on identified
+negligent breaches of duty. The investigation found no
+breaches of duty by other members of the Volkswagen AG
+Board of Management. The investigation covered all mem-
+bers of the Board of Management who were in office during
+the relevant period. In June 2021, agreements on damage
+payments were reached in this connection with the goal of
+achieving speedy, legally certain, and final resolution of the
+diesel issue as far as the civil liability of members of
+governing bodies is concerned. To this end, Volkswagen and
+Audi entered into damage settlements (liability settlements)
+with Prof. Dr. Winterkorn and Mr. Stadler respectively in
+connection with the diesel issue. Prof. Dr. Winterkorn's
+damage payment amounts to €11.2 million and that of
+Mr. Stadler to €4.1 million. Volkswagen has furthermore
+reached agreement with the relevant insurers under its
+directors and officers liability policies (D&O insurance) on
+payment of an aggregate sum of €270 million (coverage
+settlement).
+In addition, agreement was reached on damage payments by
+a former member of Audi's Board of Management and by a
+former member of Porsche's Board of Management. One
+former member of Audi's Board of Management was
+unwilling to reach a settlement; legal action is being prepared
+against him. Claims were already asserted against a former
+member of the Volkswagen Passenger Cars brand Board of
+Management.
+7. Risk assessment regarding the diesel issue
+An amount of around €2.1 (1.9) billion has been included in
+the provisions for litigation and legal risks as of December 31,
+2021 to account for the currently known legal risks related to
+the diesel issue based on the presently available information
+and the current assessments. Where adequately measurable
+at this stage, contingent liabilities relating to the diesel issue
+have been disclosed in the notes in an aggregate amount of
+€4.3 (4.2) billion, whereby roughly €3.6 (3.5) billion of this
+amount results from lawsuits filed by investors in Germany.
+The provisions recognized, the contingent liabilities disclosed,
+and the other latent legal risks in the context of the diesel
+issue are in part subject to substantial estimation risks given
+the complexity of the individual relevant factors, the ongoing
+coordination with the authorities, and the fact that the fact-
+finding efforts have not yet been concluded. Should these
+legal or estimation risks materialize, this could result in
+further substantial financial charges. In particular, adjustment
+of the provisions recognized in light of knowledge acquired or
+events occurring in the future cannot be ruled out.
+In line with IAS 37.92, no further statements have been
+made concerning estimates of financial impact or regarding
+uncertainty as to 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) filed a
+claim for damages against Volkswagen AG and Porsche SE 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
+being sought based on allegedly assigned rights currently
+amount to approximately €2.26 billion plus interest. In April
+2016, the Hanover Regional Court formulated numerous
+objects of declaratory judgment that the antitrust panel of
+the Higher Regional Court in Celle will decide on in model
+208
+Report on Risks and Opportunities
+Group Management Report
+European regulations. New, uniform limits for nitrogen oxide
+and particulate emissions in real road traffic have applied to
+new vehicle types across the EU since September 2017. This
+makes the RDE test procedure fundamentally different from
+the Euro 6 standard still in force, which stipulates that the
+limits on the chassis dynamometer are authoritative. The
+RDE regulation is intended primarily to improve air quality in
+urban areas and areas close to traffic, leading to stricter
+requirements for exhaust gas aftertreatment in passenger
+cars and light commercial vehicles. Stricter RDE processes
+and requirements have resulted in certain challenges, for
+example relating to test criteria and homologation. The
+debate on a successor regulation began at European level in
+2020. A conclusion to this debate and thus new legislation is
+not expected before 2023. It is not anticipated that this
+successor regulation will enter force until the second half of
+the decade.
+Group Management Report
+Report on Risks and Opportunities
+200
+Local bans on the use of diesel vehicles are already also in
+place in a number of other countries, though these mainly
+affect older vehicles with lower emissions standards. Regu-
+lations in Belgium that successively ban older vehicles from
+larger cities are one example. In addition to major cities such
+as Paris and London, countries like the United Kingdom are
+now discussing future bans on vehicles with internal com-
+bustion engines.
+In the Power Engineering segment, the International
+Maritime Organization (IMO) has introduced the Interna-
+tional Convention for the Prevention of Pollution from Ships
+(MARine POLlution – MARPOL), with which limits on emis-
+sions from marine engines will be lowered in phases. A
+reduction of the sulfur content in marine fuel was imple-
+mented globally with effect from January 1, 2020. In addition,
+the IMO has decided on a number of emission control areas
+in Europe and the USA/Canada that will be subject to par-
+ticularly stringent environmental regulations. Expansion to
+further regions such as the Mediterranean or Japan is already
+being planned; other regions such as the Black Sea, Alaska,
+Australia or South Korea are also in discussion. Moreover,
+emission limits are in force under Regulation (EU) 2016/1628
+and in accordance with the regulations of the US Environ-
+Group Management Report
+Report on Risks and Opportunities 201
+mental Protection Agency (EPA), for example. We are pushing
+for a maritime energy transition in specialist bodies and also
+promote this to the general public. In a first step, we are
+supporting the switch to liquefied natural gas (LNG) as a fuel
+for maritime applications, and offer dual fuel and gas-
+powered engines for new and retrofitted vessels. For the long-
+term and climate-neutral operation of seagoing vessels, we
+advocate power-to-X technology, in which excess sustainably
+generated electricity is converted into carbon-neutral gas or
+liquid fuel.
+In a November 2017 ruling, 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 the members of the
+Board of Management and Supervisory Board of Volks-
+wagen AG breached their duties in connection with the diesel
+issue from June 22, 2006 onwards 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 constitutional rights. 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
+LEGAL RISKS
+For this risk category, the likelihood of occurrence is classified
+as medium (previous year: medium) and the potential extent
+of damage is classified as medium (previous year: medium).
+The most significant risks from the QRP are associated
+with the diesel issue.
+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 connection with products and ser-
+vices or in relation to employees, public authorities, dealers,
+investors, customers, suppliers, or other contracting parties.
+For the companies in question, these disputes and proceed-
+ings may result in payments such as fines or in other
+obligations or consequences. In particular, substantial com-
+pensatory or punitive damages may have to be paid and cost-
+intensive measures may have to be implemented. In this con-
+text, specific estimation of the objectively likely consequences
+is often possible only to a very limited extent, if at all.
+Various legal proceedings are pending worldwide, particularly
+in the USA, in which customers are asserting purported
+product-related 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 Volks-
+wagen Group. Compliance with legal or regulatory require-
+ments (such as the GDPR) is another area in which risks may
+arise. This is particularly true in gray areas where Volkswagen
+and the relevant public authorities may interpret the law
+differently.
+In connection with their business activities, Volkswagen
+Group companies engage in constant dialogue with regula-
+tory agencies, including the Kraftfahrt-Bundesamt (KBA - Ger-
+man Federal Motor Transport Authority). It is not possible to
+predict with assurance how government regulators will
+assess certain issues of fact and law in a particular situation.
+For this reason, the possibility that certain vehicle charac-
+teristics and/or type approval aspects may in particular
+ultimately be deemed deficient or impermissible cannot be
+ruled out. This is fundamentally a question of the regulatory
+agency's specific evaluation in a concrete situation.
+Risks may also result from actions for infringement of
+intellectual property, including infringement of patents,
+brands, or other third-party rights, particularly in Germany
+and the USA. If Volkswagen is alleged or determined to have
+violated third-party intellectual property rights, it may for
+instance have to pay damages, modify manufacturing pro-
+cesses, or redesign products, and may be barred from selling
+certain products; this may result in delivery and production
+restrictions or interruptions.
+Criminal acts by individuals, which even the best com-
+pliance management system can never completely prevent,
+are another potential source of legal risks.
+Group Management Report
+Unless otherwise explicitly stated, the amounts disclosed
+for the litigation being reported on refer only to the respec-
+tive principal claim. Ancillary claims, such as for interest and
+litigation expense, are generally not considered.
+Report on Risks and Opportunities
+Environmental protection regulations
+The Real Driving Emissions (RDE) Regulation for passen-
+ger cars and light commercial vehicles is another of the main
+In the EU, a more time-consuming test procedure has applied
+to all new vehicles with WLTP since September 2018. Other
+challenges arise in connection with stricter processes and
+requirements regarding WLTP, such as from test criteria and
+homologation (achievement of vehicle type approvals).
+>
+>
+> Relief opportunities may be provided for additional
+innovative technologies in the vehicle that apply outside
+the test cycle (eco-innovations and off-cycle credits)
+Particularly efficient vehicles qualify for super-credits
+Special rules are in place for small-series producers and
+niche manufacturers
+Alongside technical and portfolio electrification mea-
+sures, it is also possible to use local statutory mechanisms
+such as the creation of emission pools in Europe or the
+trading of emission credits in the United States and China.
+Legislation provides further flexibility to aid target achieve-
+ment, depending on the region, for example:
+The increased regulation of fleet-based CO2 emissions and
+fuel consumption makes it necessary to use the latest mobil-
+ity technologies in all key markets worldwide. At the same
+time, electrified and also purely electric drives are becoming
+increasingly common. The Volkswagen Group closely coordi-
+nates technology and product planning with its brands so as
+to avoid breaches of fleet values, for example. These would
+entail severe payment obligations. Whether the Group meets
+its fleet targets depends crucially on its technological and
+financial capabilities, which are reflected in, for example, our
+drivetrain and fuel strategy.
+and had to be fulfilled through battery-electric vehicles, plug-
+in hybrids, or fuel cell vehicles. The minimum quota will
+increase by two percentage points annually until 2023.
+Targets for the period after 2023 have not yet been defined. In
+the USA, the annual CO2 and efficiency targets to be fulfilled
+by the fleet for new passenger cars and light commercial
+vehicles are defined by the greenhouse gas legislation (since
+2012) and Corporate Average Fuel Economy legislation (CAFE).
+A decision was reached in fiscal year 2020 to relax CO₂ fleet
+targets significantly starting in 2022. The Volkswagen Group
+decided to participate in the framework of the California Air
+Resources Board (CARB). This involves a voluntary commit-
+ment to the alternative CO2 fleet targets set by the CARB,
+which are more ambitious than the national standards. In
+December 2021, the current administration published the
+new CO2 fleet targets for the period from 2022 to 2026,
+thereby reversing the loosening of the targets by the previous
+administration. The form of the efficiency targets (CAFE) for
+this period is still under discussion.
+-
+-
+At the same time, regulations governing fleet fuel con-
+sumption of new vehicles are also being developed or intro-
+duced outside the EU27 (plus Norway, Iceland), for example in
+Brazil, Canada, China, India, Japan, Mexico, Saudi Arabia,
+South Korea, Switzerland, Taiwan, the United Kingdom and
+the USA. Brazil has introduced a fleet efficiency target as part
+of a voluntary program which grants tax advantages. To
+receive a 30% tax advantage, manufacturers must, among
+other things, achieve a specified fleet efficiency. The fuel
+consumption regulations in China, which set an average fleet
+target of 5.0 liters/100 km (NEDC) for the period 2016 to 2020,
+were continued into the period 2021 to 2025 with a target of
+4.6 liters/100 km (WLTP). In addition to this legislation on
+fleet fuel consumption, a new energy vehicle quota applies in
+China. This requires every manufacturer to increase the share
+of electric vehicles which are included with different
+weightings – in its total sales. For 2021, this quota was 14%
+If the respective fleet-wide target is not fulfilled, the Com-
+mission may impose an excess emissions premium,
+amounting to €95 per excess gram of CO2 per newly regis-
+tered vehicle.
+The targets will be tightened as from 2025: for new Euro-
+pean passenger car fleets, a reduction of 15% in CO2 emis-
+sions will therefore be required from 2025 and a reduction of
+37.5% from 2030. For new light commercial vehicle fleets, the
+required reductions will be 15% from 2025 and 31% from
+2030. In each case, the starting point is the WLTP fleet value in
+2021. These targets can only be achieved through a high
+proportion of electric vehicles within the fleet.
+Adopted and published by the EU in 2019, the regulation
+states that, from 2021 onward, the average emissions of
+European passenger car fleets must be no higher than
+95 g CO2/km. Up to and including 2020, European fleet legis-
+lation was complied with on the basis of the New European
+Driving Cycle (NEDC). From 2021 onward, the NEDC target
+value was replaced by a WLTP target value through a process
+defined by lawmakers; this change has not led to additional
+tightening of the target value. A similar approach applies to
+light commercial vehicles, where a target of 147 g CO2/km
+applied to the entire fleet in 2021.
+The specific emission targets for all new passenger car and
+light commercial vehicle fleets for brands and groups in the
+EU for 2020 and subsequent years are set out in Regulation
+(EU) No 2019/631. This regulation is a material component of
+the European climate protection policy and therefore forms
+the key regulatory framework for product design and market-
+ing by all vehicle manufacturers selling in the European
+market.
+199
+5. Special audit
+45. Remuneration based on performance shares
+46. Related party disclosures in accordance with
+IAS 24
+224
+248
+301
+Basis of consolidation
+237
+293
+Effects of climate change
+Consolidation methods
+236
+292
+Key events
+230
+292
+New and amended IFRSS not applied
+229
+27. Noncurrent and current other liabilities
+28. Tax liabilities
+249
+Currency translation
+302
+33. IFRS 16 (Leases)
+303
+Income statement disclosures
+266
+32. IAS 23 (Borrowing Costs)
+30. Noncurrent and current other provisions
+31. Trade payables
+post-employment benefits
+29. Provisions for pensions and other
+Segment reporting
+263
+303
+Accounting policies
+Other disclosures
+250
+303
+financial liabilities
+25. Noncurrent and current financial liabilities
+26. Noncurrent and current other
+Effects of new and amended IFRSS
+227
+Statement of Comprehensive Income
+220
+19. Tax assets
+287
+Income Statement
+219
+CONSOLIDATED FINANCIAL STATEMENTS
+AND NOTES
+FINANCIAL STATEMENTS
+•
+•
+.
+Independent Auditor's Report
+374
+Responsibility Statement
+287
+266
+20. Inventories
+Balance Sheet
+291
+Basis of presentation
+227
+291
+NOTES
+23. Cash, cash equivalents and time deposits
+24. Equity
+289
+288
+Cash flow statement
+226
+22. Marketable securities
+288
+Statement of Changes in Equity
+21. Trade receivables
+288
+222
+373
+1. Sales revenue
+34. IFRS 7 (Financial Instruments)
+372
+14. Lease assets and investment property
+280
+13. Property, plant and equipment
+278
+368
+282
+12. Intangible assets
+366
+Balance sheet disclosures
+275
+43. Average number of employees during the year
+44. Events after the balance sheet date
+42. Personnel expenses
+41. Total fee of the Group auditor
+275
+15. Equity-accounted investments and other
+372
+equity investments
+•
+.
+18. Noncurrent and current other receivables
+286
+17. Noncurrent and current other financial assets
+285
+Independent auditor's report
+374
+receivables
+48. Remuneration of the Board of Management
+and the Supervisory Board
+Responsibility Statement
+47. German Corporate Governance Code
+373
+16. Noncurrent and current financial services
+284
+40. Other financial obligations
+365
+11. Earnings per share
+274
+37. Capital management
+financial instruments
+36. Financial risk management and
+35. Cash flow statement
+347
+5. Other operating income
+268
+4. Administrative expenses
+267
+323
+3. Distribution expenses
+267
+321
+2. Cost of sales
+267
+268
+308
+6. Other operating expenses
+38. Contingent liabilities
+364
+10. Income tax income/expense
+270
+364
+9. Other financial result
+270
+364
+8. Interest result
+269
+363
+investments
+39. Litigation
+350
+7. Share of the result of equity-accounted
+269
+349
+227
+Notes
+Statement of Changes in Equity
+Group Management Report
+Report on Risks and Opportunities
+211
+risks through the diversified investment of funds and
+through minimum values set out in the respective invest-
+ment guidelines. In addition, exchange rates are hedged
+when market conditions are appropriate.
+In the notes to the consolidated financial statements we
+explain our hedging policy, the hedging rules and the default
+and liquidity risks, and quantify the hedging transactions
+mentioned. We also disclose information on market risk
+within the meaning of IFRS 7 in the same section.
+Cash Flow Statement
+Channeling excess liquidity into investments and entering
+into derivatives contracts gives rise to counterparty risk.
+Partial or complete failure by a counterparty to perform its
+obligation to pay interest and repay principal, for example,
+would have a negative impact on the Volkswagen Group's
+earnings and liquidity. We counter this risk through our
+counterparty risk management, which we describe in more
+detail in the section entitled "Principles and Goals of Finan-
+cial Management” in the “Results of Operations, Financial
+Position and Net Assets" chapter. The financial instruments
+held for hedging purposes give rise to both counterparty risks
+and balance sheet risks, which we limit using hedge
+accounting.
+By diversifying when selecting business partners, we
+work to limit the impact of a default and keep the Volkswagen
+Group solvent at all times, even in the event of a default by
+individual counterparties.
+The use of financial instruments may result in losses if
+the hedging exchange rates are less favorable than the rates
+achievable on the market at the maturity of the financial
+instrument.
+Risks arising from trade receivables and from financial
+services are explained in more detail in the notes to the con-
+solidated financial statements.
+Liquidity risk
+Special funds in which we invest surplus liquidity may
+entail equity price risks and fund price risks. We reduce these
+Volkswagen is reliant on its ability to adequately cover its
+financing needs. There is a potential liquidity risk that we will
+be unable to cover existing capital requirements by raising
+funds or being unable to finance the Group on reasonable
+terms, which in turn can have a substantially negative impact
+on Volkswagen's business position, assets, financial position
+and earnings.
+primarily safeguarded through retained, non-distributed
+earnings, by drawing down on credit lines and by issuing
+financial instruments on the money and capital markets. The
+capital requirements of the financial services business are
+covered mainly by raising funds in the national and inter-
+national financial markets, as well as through customer
+deposits from the direct banking business.
+One of the ways in which Volkswagen finances its projects
+is with loans provided by national development banks such
+as Kreditanstalt für Wiederaufbau (KfW) or Banco Nacional de
+Desenvolvimento Econômico e Social (BNDES), or by supra-
+national development banks.
+In addition to confirmed credit lines, unconfirmed lines
+of credit from commercial banks supplement our broadly
+diversified refinancing structure.
+Financing opportunities can be hindered by worsening
+financial and general market conditions - including as a
+result of the Covid-19 pandemic - a worsening credit profile
+and outlook or a downgrade or withdrawal of the credit
+rating. In such cases, there is a risk of a fall in demand from
+market participants for securities issued by Volkswagen,
+which may additionally have a detrimental effect on the
+interest rates payable and restrict access to the capital market.
+Risks and opportunities in the financial services business
+While carrying out our financial services activities, we are
+primarily exposed to residual value risks and credit risks.
+A residual value risk arises when the expected fair value
+for the disposal of the lease or finance asset may be lower
+than the residual value set at contract conclusion. However,
+there is also a possibility that disposal of the asset will
+generate more income than calculated for the residual value.
+Referring to the bearer of residual value risk, a distinction
+is made between direct and indirect residual value risks. A
+direct residual value risk means that our financial services
+companies directly bear this risk (as outlined in the contract).
+An indirect residual value risk occurs when, based on a
+residual value guarantee, the residual value risk has passed to
+a third party, such as a dealer. In such cases, there is an initial
+counterparty default risk associated with this third party (the
+residual value guarantor). If the guarantor defaults, the
+residual value risk passes to our financial services companies.
+Management of the residual value risk is based on a
+defined control cycle, which ensures that risks are fully
+assessed, monitored, responded to and communicated. This
+process structure enables us to manage residual risks profes-
+sionally and also to systematically improve and enhance the
+way we handle residual value risks.
+212
+Report on Risks and Opportunities
+Group Management Report
+In principle, the Automotive Division and Financial Ser-
+vices Division refinance themselves independently of one
+another. However, they are subject to very similar refinancing
+risks. In the Automotive Division, the Company's solvency is
+The hedging of commodity prices entails risks relating to the
+availability of raw materials and price trends. We contin-
+uously analyze potential risks arising from changes in com-
+modity and energy prices in the market so that immediate
+action can be taken whenever these arise. We limit these risks
+particularly by entering into forward transactions and swaps.
+We have used appropriate contracts to hedge some of our
+requirements for commodities such as aluminum, coal,
+copper and lead over a period of up to six years, in the case of
+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. For
+selected commodities, this may also involve increases in
+physical inventories. We have also entered into transactions
+in order to supplement and improve allocations of CO2 emis-
+sion certificates as part of the European Union Emissions
+Trading System (EU ETS).
+Foreign currency risk is reduced in particular through
+natural hedging, i.e. by adapting our production capacity at
+our locations around the world, establishing new production
+facilities in the most important currency regions and also
+procuring a large percentage of components locally. We hedge
+the residual exchange rate risk using hedging instruments.
+These mainly comprise currency forwards and currency
+options. We use these transactions to limit the exchange rate
+risk associated with forecasted cash flows from operating
+activities, intragroup financing and liquidity positions in
+currencies other than the respective functional currency, for
+example as a result of restrictions on capital movements. The
+currency forwards and currency options can have a term of
+up to ten years. We use these to hedge our principal foreign
+currency risks, mostly against the euro and primarily in
+Australian dollars, Brazilian real, Canadian dollars, Chinese
+renminbi, Czech koruna, Hong Kong dollars, Hungarian
+forints, Indian rupees, Japanese yen, Mexican pesos,
+Norwegian kroner, Polish zloty, pounds sterling, Russian
+rubles, Singapore dollars, South African rand, South Korean
+won, Swedish kronor, Swiss francs, Taiwan dollars and US
+dollars.
+currency risk - and risks arising from fluctuations in the
+value of financial instruments by means of interest rate
+swaps, cross-currency interest rate swaps and other interest
+rate contracts with generally matching amounts and matu-
+rities. The principle of matching amounts and maturities
+applies to financing arrangements within the Volkswagen
+Group in the Automotive Division. In the Financial Services
+Division, the risk of changes in the interest rate is managed
+on the basis of limits using interest rate derivatives as part of
+the defined risk strategy.
+Group Management Report
+Report on Risks and Opportunities 209
+complaints. The plaintiffs in these actions had alleged that
+several automobile manufacturers including Volkswagen AG
+and other Group companies had conspired to unlawfully
+increase vehicle prices 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 that the alleged
+agreements unreasonably restrained competition in viola-
+tion of US law. The plaintiffs appealed this ruling. In August
+2021, the plaintiffs in one of the two class actions withdrew
+their appeal. In October 2021, the Ninth Circuit Court of
+Appeals affirmed the dismissal of the other class action by
+the US District Court for the Northern District of California.
+After receiving an extension until December 27, 2021, the
+plaintiffs in the latter class action filed a motion for
+rehearing, which the Ninth Circuit denied on January 25,
+2022. On December 28, 2021, those plaintiffs also filed a
+motion seeking to set aside the District Court's October 2020
+judgment and to be allowed to file a new amended complaint.
+Plaintiffs in Canada filed claims with similar allegations on
+behalf of putative classes of purchasers against several auto-
+mobile manufacturers, including Volkswagen Group Canada
+Inc., Audi Canada Inc., and other Volkswagen Group com-
+panies. Neither provisions nor contingent liabilities are
+stated because the early stage of the proceedings makes an
+assessment of the realistic risk exposure currently impos-
+sible.
+In addition, a few national and international authorities
+have initiated antitrust investigations. Volkswagen is cooper-
+ating closely with the responsible authorities in these investi-
+gations. An assessment of the underlying situation is not
+possible at this early stage.
+Porsche AG has discovered potential regulatory issues
+relating to vehicles for various markets worldwide. There are
+questions as to the permissibility of specific hardware and
+software components used in type approval measurements.
+Differences compared with production versions may also
+have occurred in certain cases. Based on the information
+presently available, current production is not affected,
+however. The issues are unrelated to the defeat devices that
+were at the root of the diesel issue. Porsche AG is cooperating
+with the relevant authorities including the Stuttgart Office of
+the Public Prosecutor, which is investigating the matter in
+Germany. Based on the available information, no formal
+criminal investigation has been opened against the company,
+however. Porsche's own internal investigations are still in
+progress. In January 2021, a consolidated complaint was filed
+with the US District Court for the Northern District of
+California alleging that the affected vehicles used certain
+software and/or hardware that resulted in increased emis-
+sions and/or overstated fuel economy estimates as compared
+to the results of certification testing. The defendants (Volks-
+wagen AG, Dr. Ing. h.c. F. Porsche AG, and Porsche Cars North
+America, Inc.) have moved for dismissal of the action.
+In December 2021, Navistar entered into a final Profit
+Sharing Settlement Agreement to terminate with past, present,
+and future effect certain disputes most recently litigated before
+an arbitration tribunal concerning the calculation of profit
+sharing amounts for purposes of Navistar's corporate retiree
+healthcare commitments. At the same time and in the same
+context, an agreement to settle the class action lawsuits was
+also reached with class action members; this agreement is
+still subject to approval by the supervising court, which will
+hear the class action members before ruling. The final agree-
+ment provides for a payment by Navistar in an amount of
+€491 million (USD 556 million); in fulfillment of the agree-
+ment, Navistar has already made an initial payments totaling
+€88 million (USD 100 million). Navistar recognized provi-
+sions in this regard in prior periods.
+In November 2021, three claimants accompanied by
+Greenpeace filed a lawsuit against Volkswagen AG before the
+Braunschweig Regional Court. The action seeks to compel
+Volkswagen to initially reduce in stages and by 2029 com-
+pletely cease its production and placement into the stream of
+commerce of vehicles with internal combustion engines as
+well as to reduce greenhouse gas emissions from develop-
+ment, production, and marketing (including third party
+vehicle use). The lawsuit further seeks to compel Volkswagen
+to exercise influence over Group companies, subsidiaries, and
+joint ventures so as to cause them to fulfill these demands as
+well. In addition, another action with identical requests for
+relief and by and large the same rationale has been filed by an
+organic farmer with the support of Greenpeace before the
+Detmold Regional Court. Volkswagen is analyzing the
+lawsuits and will defend itself against them.
+Provisions were recognized by Volkswagen Bank GmbH and
+Volkswagen Leasing GmbH for possible claims in connection
+with financial services provided to consumers. These relate to
+actions involving certain features of customer loan and
+leasing agreements that may toll the running of the statutory
+cancellation time periods.
+The lawsuit filed by GT Gettaxi Ltd. alleging in particular
+large damage claims, which was served on Volkswagen AG
+and another defendant in February 2020, was dismissed by
+210
+Report on Risks and Opportunities
+Group Management Report
+the Cypriot first instance court in August 2021 due to lack of
+jurisdiction of the Cypriot courts. GT Gettaxi Ltd. has appealed
+this decision to the Supreme Court (which is the court of final
+appeal in Cyprus).
+In line with IAS 37.92, no further statements have been made
+concerning estimates of financial impact or regarding
+uncertainty as to 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 pro-
+ceedings or the interests of the Company.
+Tax risks
+Volkswagen AG and its subsidiaries have operations world-
+wide and are audited by local tax authorities on an ongoing
+basis. Amendments to tax laws and changes in legal prece-
+dent 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.
+Risks arise particularly from tax assessment of the cross-
+border supply of intragroup goods and services. Through
+organizational measures, such as the implementation of an
+advance pricing agreement, as well as the monitoring of
+transfer prices, Volkswagen constantly monitors the develop-
+ment of tax risks, as well as the impact thereof on the
+consolidated financial statements.
+Tax provisions were recognized for potential future pay-
+ments of taxes for former years, while other provisions were
+recognized for ancillary tax payments arising in this
+connection.
+Financial risks
+No risks with a score of 20 or more were reported for this risk
+category in the reporting year.
+Strategies for hedging financial risks
+-
+In the course of our business activities, financial risks may
+arise from changes in interest rates, exchange rates, raw
+material prices, or share and fund prices but also from
+unforeseeable events such as the Covid-19 pandemic. Man-
+agement of these financial risks and of liquidity risks is the
+central responsibility of the Group Treasury department,
+which reduces these risks using nonderivative and derivative
+financial instruments. The Board of Management is informed
+of the current risk situation at regular intervals.
+Interest rate risk refers to potential losses that could arise
+as a result of changes in market interest rates. It occurs
+because of interest rate mismatches between asset and lia-
+bility items in a portfolio or on the balance sheet. We hedge
+interest rate risk - where appropriate in combination with
+As part of our risk management efforts, the appropriateness
+of the risk provision is assessed regularly, as is the residual
+value risk potential. In the process, we compare the con-
+tractually agreed residual values with the obtainable fair
+values. These are determined utilizing data from external
+service providers and our own marketing data. We do not
+take possible gains on residual market values into account
+when recognizing risk provisions. Based on the resulting
+potential residual value risk, a variety of measures are
+initiated in order to limit this risk. With regard to new
+business, the residual value recommendation must take into
+account current market circumstances and factors that might
+have an influence in future.
+Credit risk describes the risk of losses due to defaults in
+customer transactions, specifically by the borrower or lessee.
+Default occurs when the borrower or lessee is unable or
+unwilling to make the payments due. This includes late or
+partial payment of interest and principal on the part of the
+contracting party.
+Risks arising from financial instruments
+An opportunity may arise if the losses from the lending
+and leasing business are lower than the previously calculated
+expected losses and the risk provision recognized on this
+basis. Particularly in those countries in which we take a con-
+servative approach to risk due to the uncertain economic
+situation, the realized losses may be lower than the expected
+losses if the economy stabilizes and borrowers' credit ratings
+improve as a result.
+We predict that trends in the markets for passenger cars
+in the individual regions will be mixed in 2022. Overall, the
+global volume of new vehicle sales is expected to be moder-
+ately up on the prior year without reaching the pre-pandemic
+level. This prediction assumes that the Covid-19 pandemic
+does not flare up again and that shortages of intermediates,
+especially semiconductors, and commodities become less
+intense. For 2022, we anticipate that the volume of new
+passenger car registrations in Western Europe will be
+distinctly above that recorded in the reporting period. In the
+German passenger car market, we expect the volume of new
+registrations in 2022 to also distinctly exceed the prior-year
+figure. Sales of passenger cars in 2022 are expected to moder-
+ately exceed the prior-year figures in markets in Central and
+Eastern Europe – subject to the further development of the
+Russia-Ukraine conflict. Sales volume in the markets for
+passenger cars and light commercial vehicles (up to 6.35 ton-
+nes) in North America in 2022 is forecast to be slightly higher
+than the previous year's level. We anticipate a moderate
+increase overall in new registrations in the South American
+markets in 2022 compared with the previous year. The
+passenger car markets in the Asia-Pacific region are expected
+to be slightly up on the prior-year level in 2022.
+Trends in the markets for light commercial vehicles in the
+individual regions will also be mixed; on the whole, we
+anticipate a slight increase in the sales volume for 2022. This
+assumes that the Covid-19 pandemic does not flare up again
+and that shortages of intermediates, especially semiconduc-
+tors, and commodities become less intense.
+For 2022, we expect a significantly positive development
+in new registrations for mid-sized and heavy trucks with a
+gross weight of more than six tonnes compared with the
+previous year, with variations from region to region, in the
+markets that are relevant for the Volkswagen Group. A
+pronounced increase in overall demand, with regional
+variations, is expected for 2022 in the bus markets relevant
+for the Volkswagen Group.
+We anticipate that automotive financial services will con-
+tinue to prove highly important to global vehicle sales in 2022.
+We believe we are well prepared overall for the future
+challenges pertaining to automotive business activities and
+for the mixed development of the regional automotive
+markets. Our brand diversity, our presence in all major world
+markets, our broad and selectively expanded product range,
+and our technologies and services put us in a good com-
+petitive position worldwide. As part of the transformation of
+our core business, we are positioning our Group brands with
+an even stronger focus on their individual characteristics, and
+are optimizing our vehicle and drive portfolio. The focus is
+primarily on our vehicle fleet's carbon footprint and on the
+most attractive and fastest-growing market segments. In
+addition, we are working to leverage the advantages of our
+multibrand Group even more effectively with the ongoing
+development of new technologies and the enhancement of
+our toolkits.
+Group Management Report
+Prospects for 2021
+215
+We anticipate that, given the continuing challenging market
+conditions, deliveries to customers of the Volkswagen Group
+in 2022 will be 5% to 10% up on the previous year. This
+assumes that the Covid-19 pandemic will not flare up again
+and that shortages of intermediates and commodities will
+become less intense. The 2022 fiscal year will continue to be
+affected by shortfalls in supply due to the structural shortage
+of semiconductors. We anticipate that the supply of semic-
+onductors will improve in the second half of the year,
+compared with the first half.
+Challenges will arise particularly from the economic
+situation, the increasing intensity of competition, volatile
+commodity and foreign exchange markets, securing supply
+chains and more stringent emissions-related requirements.
+We expect the sales revenue of the Volkswagen Group and of
+the Passenger Cars Business Area in 2022 to be 8% to 13%
+higher than the prior-year figure. In terms of operating result
+for the Group and the Passenger Cars Business Area, we
+forecast an operating return on sales in the range of 7.0% to
+8.5% in 2022. For the Commercial Vehicles Business Area, we
+anticipate an operating return on sales of 5.0% to 7.0% amid
+a strong year-on-year increase in sales revenue, including
+Navistar. In the Power Engineering Business Area, we expect
+sales revenue to be moderately above the prior-year figure
+and operating result to be in the low triple-digit million
+euro range. For the Financial Services Division, we forecast
+that sales revenue will be noticeably higher than the prior-
+year figure and that the operating result will be around
+€4.5 billion.
+Wolfsburg, March 1, 2022
+The Board of Management
+CONSOLIDATED FINANCIAL
+STATEMENTS
+219
+220
+222
+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 and for recognizing risk provisions.
+224
+226
+Income Statement
+Statement of Comprehensive Income
+Our planning is based on the assumption that global eco-
+nomic output will continue to grow in 2022, albeit at a
+somewhat lower level overall, after the recovery observed in
+the past fiscal year - provided that the Covid-19 pandemic
+does not flare up again and that shortages of intermediates
+and commodities become less intense. We continue to
+believe that risks will arise from protectionist tendencies,
+turbulence in the financial markets and structural deficits in
+individual countries. In addition, growth prospects will be
+negatively impacted by ongoing geopolitical tensions and
+conflicts, with risks arising especially from the Russia-
+Ukraine conflict. We anticipate that both the advanced
+economies and the emerging markets will experience
+positive momentum.
+Group Management Report
+Balance Sheet
+Prospects for 2021
+Prospects for 2022
+Risks are managed and monitored within the framework
+of corresponding processes relating to economic circum-
+stances and collateral, adherence to limits, contractual obli-
+gations, and conditions stipulated both by outside parties
+and the company itself. As such, commitments are managed
+according to the degree of risk involved (standard, intensified
+and problem loan management).
+More information on risks in the financial services busi-
+ness can be found in the 2021 annual reports of Volkswagen
+Financial Services AG and Volkswagen Bank GmbH.
+No risks with a score of 20 or more were reported for this risk
+category in the reporting year.
+Opportunities and risks from partnerships
+As part of our new strategy NEW AUTO, we are stepping up
+our efforts to forge partnerships, both for the transformation
+of our core business and for the establishment of the new
+mobility solutions business.
+In the field of battery cells, possible risks could arise from
+potential disagreement with our partners, possible delays in
+battery cell development or delayed battery cell production.
+Close interaction with partners in the field of e-mobility
+in the form of partnerships and joint ventures supports
+technological change. Examples include the development of a
+comprehensive charging infrastructure. This cooperation
+involves risks such as an increased coordination workload,
+more complex decision-making processes and the loss of
+expertise. At the same time, opportunities are presented by
+the pooling of specialist knowledge, by horizontal and
+vertical integration and by better use of resources. Volks-
+wagen has therefore created various teams in Group Com-
+ponents to closely support all such partnerships.
+The marketing of the Modular Electric Drive Toolkit to
+third parties, for example as part of the strategic alliance with
+Ford, could result in damage claims in the event of problems
+with procurement, production and quality.
+By entering into partnerships at a local level, we aim to
+identify regional customer needs more precisely, establish
+competitive cost structures and thus develop and offer mar-
+ket-driven products. We are concentrating to a greater extent
+on partnerships, acquisitions and venture capital investments.
+In doing so, we are generating maximum value for the Group
+and its brands and are able to expand our expertise,
+particularly in new areas of business. Our innovative
+presence in the markets supports this process. At the same
+time, there is a risk that the interests of business partners
+differ from our own.
+Volkswagen owns a large number of patents and other
+industrial property rights and copyrights. Patent and
+licensing infringements may also arise in partnerships and
+thus result in the unauthorized disclosure of company-
+specific expertise. Volkswagen monitors the sales markets
+and also protects its expertise with legal action.
+Opportunities and risks from mergers & acquisitions and/or other
+strategic partnerships/investments
+For the goodwill recognized in the financial statements and
+for brand names, as well as for equity investments, there is a
+risk that the carrying amount of goodwill may be higher than
+the recoverable amount and that an extraordinary impair-
+ment loss must therefore be recognized. Volkswagen tests at
+least once a year on the basis of underlying cash-generating
+units, whether the value of the goodwill or the brand names
+could have been impaired. We also regularly test the equity
+investments for impairment. The possible consequences of
+climate change and future regulatory requirements, espe-
+Risks arising from the recoverability of goodwill or brand names and from
+equity investments
+commodities relevant to the Volkswagen Group or in parts supply (especially
+semiconductors), or any deviations in the actual effects of the Covid-19 pandemic from the
+scenario presented in this report 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
+and of 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.
+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, political and legal environment in individual countries,
+economic regions and markets, 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, any significant shifts in exchange rates or
+The Volkswagen Group's overall risk and opportunity posi-
+tion results from the specific risks and opportunities shown
+above. We have put in place a comprehensive risk manage-
+ment system to ensure that these risks are controlled. The
+most significant risks to the Volkswagen Group across all risk
+categories arise from a negative trend in markets and unit
+sales, with regard to quality and cyber security, and from an
+inability to develop products in line with demand and
+requirements, especially in view of e-mobility and digitali-
+zation. Non-fulfillment of CO2-related requirements also
+constitutes a risk. The Volkswagen Group continues to be
+exposed to risks from the diesel issue. In 2022, any flare-up of
+the Covid-19 pandemic, the supply situation, especially for
+semiconductors, and the Russia-Ukraine conflict may have an
+adverse effect. Taking into account all the information known
+to us at present, no risks exist which could pose a threat to
+the continued existence of significant Group companies or
+the Volkswagen Group.
+OVERALL ASSESSMENT OF THE RISK AND OPPORTUNITY POSITION
+214
+Risks from the disposal of equity investments
+cially where associated with the transformation of our
+business towards e-mobility, and the potential effects of
+these, are taken into account in our medium-term planning
+and thus in the calculation of future cash flows, including in
+impairment tests. If there are objective indications that the
+recoverable amount of the asset concerned is lower than the
+carrying amount, Volkswagen recognizes this as a non-cash
+impairment. An impairment can be caused, for example, by
+an increase in interest rates or deteriorating business
+prospects.
+Report on Risks and Opportunities 213
+Group Management Report
+An unexpected need for funding may lead to a situation in
+which assets have to be sold for a lower amount not equi-
+valent to their value.
+Proceeds from disposal of intangible assets, property, plant and equipment, and investment property
+143
+411
+Change in investments in securities
+-1,281
+-4,462
+Change in loans and time deposits
+-667
+469
+-1,071
+-26,128
+-22,690
+Capital contributions/capital redemptions
+2,984
+Dividends paid
+-3,022
+-2,952
+-12,914
+195
+Cash flows from investing activities
+52
+-7,843
+402
+4,345
+-16,205
+260
+Cash flows from operating activities
+38,633
+24,901
+Investments in intangible assets (excluding development costs), property, plant and equipment, and investment property
+Additions to capitalized development costs
+-10,655
+-11,273
+-6,473
+Acquisition of subsidiaries
+-3,158
+26
+Acquisition of other equity investments
+-2,741
+-1,660
+Disposal of subsidiaries
+-304
+Change in financial services receivables
+Disposal of other equity investments
+Change in lease assets
+540
+1,943
+9,339
+9,214
+Gain/loss on disposal of noncurrent assets and equity investments
+180
+-889
+Share of the result of equity-accounted investments
+Other noncash expense/income
+Change in inventories
+Change in receivables (excluding financial services)
+787
+536
+-1,652
+-1,572
+2,110
+1,334
+1,888
+712
+Change in liabilities (excluding financial liabilities)
+1,856
+Depreciation of and impairment losses on lease assets¹
+803
+454
+Impairment losses on equity investments¹
+Capital transactions with noncontrolling interest shareholders
+2021
+Change in provisions
+2020
+Cash and cash equivalents at beginning of period
+33,432
+24,329
+Earnings before tax
+20,126
+11,667
+Income taxes paid
+-4,216
+-2,646
+Depreciation and amortization of, and impairment losses on, intangible assets, property, plant and equipment,
+and investment property¹
+12,947
+12,765
+Amortization of and impairment losses on capitalized development costs¹
+5,050
+4,637
+137
+-590
+-19,228
+Proceeds from issuance of bonds
+Regarding financial instruments that reference discontinued benchmark rates, the Volkswagen Group aims
+to complete its transition process prior to their official cessation dates, i.e. any existing derivatives transactions
+("legacy trades") have been or will be manually transitioned to alternative benchmark rates (active approach)
+rather than relying on incorporation of a contractual fallback language made available by the International Swaps
+and Derivatives Association (ISDA) via ISDA 2020 IBOR Fallbacks Protocol or respective bilateral agreements with
+the Group's counterparties (passive approach). For new derivatives transactions that reference discontinued rates
+(if any), respective fallback mechanisms have been incorporated into the relevant framework agreements with
+the Group's counterparties via ISDA 2020 IBOR Fallbacks Supplement to the 2006 ISDA Definitions, the 2021 ISDA
+Interest Rate Derivatives Definitions and/or the 2018 ISDA Benchmark Supplement.
+The Volkswagen Group is exposed to the interest rate benchmark reform regarding its variable IBOR-related
+transactions. To avoid any material risk arising from the transition to alternative benchmark rates (interest rate
+basis risk, liquidity risk, litigation risk, operational risk) risk management strategies and procedures have been
+implemented. The Volkswagen Group has closely monitored the market and the output from the various industry
+working groups managing the transition to new benchmark interest rates. This includes announcements made
+by the IBOR regulators.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+228
+As from January 1, 2021, the application of amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (Interest
+Rate Benchmark Reform - Phase 2) became mandatory. The Phase 2 amendments address the accounting treatment
+arising from the actual replacement of an interest rate benchmark with an alternative benchmark rate. The
+amendments introduce practical expedients with regard to the modification of financial assets, financial
+liabilities, lease liabilities and hedging relationships. Changes to contractual cash flows as a result of replacing
+the existing benchmark interest rate on an economically equivalent basis as a direct consequence of the interest
+rate benchmark reform are accounted for by adjusting the effective interest rate without recognizing any direct
+modification gains or losses. A similar expedient will be introduced for the accounting treatment of lease
+liabilities as a result of amendments to IFRS 16. Moreover, under the amended standards, a hedging relationship
+is not discontinued as a result of switching to a new benchmark interest rate on an economically equivalent basis,
+but continues following an adjustment to the hedge documentation, if the hedging relationship still meets the
+other requirements for hedge accounting.
+Volkswagen AG has applied all accounting pronouncements adopted by the EU and effective for periods beginning
+in fiscal year 2021.
+Effects of new and amended IFRSS
+The Board of Management completed preparation of the consolidated financial statements on March 1, 2022.
+On that date, the period ended in which adjusting events after the reporting period are recognized.
+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 aforementioned 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 provide a true and fair view of the net assets, financial
+position and results of operations as well as the cash flows of the Volkswagen Group.
+The consolidated financial statements were prepared in euros. Unless otherwise stated, all amounts are given
+in millions of euros (€ million).
+Moreover, all the provisions of German commercial law that Volkswagen is additionally required to apply, as
+well as the German Corporate Governance Code, have been complied with in the preparation of the consolidated
+financial statements. 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 accounting policies applied in the previous year were generally retained. The only changes required
+resulted from new or amended standards.
+In accordance with Regulation No. 1606/2002 of the European Parliament and of the Council, Volkswagen AG
+prepared its consolidated financial statements for 2021 in compliance with the International Financial Reporting
+Standards (IFRSS), as adopted by the European Union. All the IFRSS adopted by the EU and required to be applied
+have been complied with.
+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.
+Basis of presentation
+of the Volkswagen Group as of December 31, 2021
+Financial Statements
+Notes to the Consolidated
+The exposures of financial instruments that are still affected by the interest rate benchmark reform at the
+reporting date arise on derivative and non-derivative financial assets and liabilities. They are exposed to the
+following significant benchmark rates. In our view EURIBOR is not affected by a replacement so the regarding
+transactions are outside the scope of this disclosure.
+227
+Disclosures on exposures impacted by interest rate benchmark reform as at December 31, 2021:
+USD LIBOR
+of the Volkswagen Group for the period January 1 to December 31, 2021
+The amendments referred to above do not materially affect the Volkswagen Group's net assets, financial position
+and results of operations.
+16,333
+13,028
+1,354
+0
+13,212
+3,121
+2,406
+0
+389
+0
+10,622
+965
+Nominal amount
+Derivatives
+financial assets financial liabilities
+Carrying amount Carrying amount
+Non-derivative
+Non-derivative
+EUR LIBOR
+Total
+STIBOR
+€ million
+-238
+Notes to the Consolidated Financial Statements
+Explanatory notes on the cash flow statement are presented in the section relating to the cash flow statement.
+-1,246
+3,577
+-3,928
+Total third-party borrowings
+Gross liquidity
+Securities, loans and time deposits
+Cash and cash equivalents at end of period
+Cash and cash equivalents at end of period
+Net change in cash and cash equivalents
+Change of loss allowance within cash and cash equivalents
+Effect of exchange rate changes on cash and cash equivalents
+Cash flows from financing activities
+Repayments of lease liabilities
+Changes in other financial liabilities
+-19,815
+-30,557
+Repayments of bonds
+25,181
+32,659
+-1,100
+Consolidated Financial Statements
+-7,754
+942
+1 Net of impairment reversals.
+-137,380
+-136,576
+-203,457
+-210,213
+66,078
+73,637
+32,645
+34,515
+33,432
+39,123
+Net liquidity
+33,432
+39,123
+9,103
+5,691
+0
+-1
+-745
+7,637
+Cash flow statement
+21
+€ million
+6
+55
+61
+Items that will not be reclassified to profit or loss
+Share of other comprehensive income of equity-accounted investments
+that will not be reclassified to profit or loss, net of tax
+1
+-6
+-6
+-7
+2
+928
+-1,933
+-1,940
+930
+-9
+-2,861
+-2,871
+Pension plan remeasurements recognized in other comprehensive income
+Pension plan remeasurements recognized in other comprehensive income, before tax
+Deferred taxes relating to pension plan remeasurements recognized in other
+comprehensive income
+-43
+533
+-1,885
+-1,885
+0
+Exchange differences on translating foreign operations
+2,866
+Fair value changes recognized in other comprehensive income (OCI I)
+Hedging
+-37
+-2,836
+-2,874
+-6
+-6
+Deferred taxes relating to exchange differences on translating foreign operations
+Exchange differences on translating foreign operations, net of tax
+8,334
+-37
+-2,868
+Exchange differences on translating foreign operations, before tax
+0
+16
+16
+-37
+-2,846
+-2,883
+Gains/losses on currency translation recognized in other comprehensive income
+Transferred to profit or loss
+-2,830
+8,824
+interests
+attributable to
+noncontrolling
+2,341
+2,401
+7
+624
+631
+Total comprehensive income
+Other comprehensive income, net of tax
+Deferred taxes relating to other comprehensive income
+Other comprehensive income, before tax
+60
+Items that may be reclassified to profit or loss
+Share of other comprehensive income of equity-accounted investments that
+-43
+-43
+Fair value valuation of debt instruments that may be reclassified to profit or loss,
+net of tax
+18
+18
+Deferred taxes relating to fair value valuation of debt instruments recognized in other
+comprehensive income
+-61
+-61
+may be reclassified to profit or loss, net of tax
+2,872
+7,231
+96
+Equity
+Equity
+attributable to
+Volkswagen AG
+hybrid capital
+investors
+Equity
+attributable to
+Volkswagen AG
+shareholders
+Total
+Changes in comprehensive income for the period January 1 to December 31, 2020
+221
+Statement of Comprehensive Income
+Earnings after tax
+€ million
+7,134
+Consolidated Financial Statements
+539
+21,285
+21,958
+87
+6,442
+6,529
+-9
+-692
+-702
+133
+-6
+Transferred to profit or loss (OCI I)
+-1,122
+250
+-48
+| | |
+-3,777
+-3,825
+-45
+-1,645
+-1,690
+-6
+247
+-297
+Total comprehensive income
+Other comprehensive income, net of tax
+Deferred taxes relating to other comprehensive income
+Other comprehensive income, before tax
+Items that may be reclassified to profit or loss
+may be reclassified to profit or loss, net of tax
+Share of other comprehensive income of equity-accounted investments that
+27
+27
+-304
+27
+3
+-3,530
+Tax receivables
+Other receivables
+Other financial assets
+Financial services receivables
+Other equity investments
+Equity-accounted investments
+Investment property
+Lease assets
+Property, plant and equipment
+-3,575
+Intangible assets
+Assets
+€ million
+Balance Sheet
+222
+-88
+533
+4,804
+5,249
+-45
+Noncurrent assets
+Fair value valuation of debt instruments that may be reclassified to profit or loss,
+before tax
+Fair value valuation of debt instruments that may be reclassified to profit or loss,
+net of tax
+-12
+1,178
+Transferred to profit or loss (OCI II)
+0
+-799
+-799
+Fair value changes recognized in other comprehensive income (OCI II)
+-1
+1,192
+1,191
+1,178
+Cash flow hedges (OCI I), net of tax
+-553
+-553
+Deferred taxes relating to cash flow hedges (OCI I)
+-2
+1,746
+1,744
+Cash flow hedges (OCI I), before tax
+4
+-1,126
+1
+-12
+0
+378
+Deferred taxes relating to fair value valuation of debt instruments recognized in other
+comprehensive income
+39
+39
+Fair value valuation of debt instruments that may be reclassified to profit or loss,
+before tax
+1
+1
+Transferred to profit or loss
+38
+38
+Cash flow hedges (OCI II), before tax
+Fair value valuation of debt instruments that may be reclassified to profit or loss
+Fair value changes recognized in other comprehensive income
+269
+268
+Cash flow hedges (OCI II), net of tax
+0
+-110
+-110
+Deferred taxes relating to cash flow hedges (OCI II)
+0
+379
+0
+Deferred tax assets
+0
+Transferred to profit or loss
+€ million
+Earnings after tax
+Total
+Equity
+attributable to
+Volkswagen AG
+shareholders
+Equity
+attributable to
+Volkswagen AG
+hybrid capital
+investors
+Equity
+attributable to
+noncontrolling
+interests
+15,428
+14,843
+539
+46
+Pension plan remeasurements recognized in other comprehensive income
+Pension plan remeasurements recognized in other comprehensive income, before tax
+Deferred taxes relating to pension plan remeasurements recognized in other
+comprehensive income
+5,603
+5,556
+47
+Pension plan remeasurements recognized in other comprehensive income, net of tax
+Fair value valuation of equity instruments that will not be reclassified to profit or loss,
+net of tax
+-1,423
+4,180
+-1,414
+4,143
+Changes in comprehensive income for the period January 1 to December 31, 2021
+Statement of Comprehensive Income
+Consolidated Financial Statements
+Statement of Comprehensive Income
+307
+15,428
+8,824
+46
+-43
+539
+533
+14,843
+8,334
+-9
+Volkswagen AG shareholders
+11
+29.59
+16.60
+Basic/diluted earnings per preferred share in €
+11
+29.65
+16.66
+219
+220
+Basic/diluted earnings per ordinary share in €
+37
+-52
+-39
+3,340
+53
+Hedging
+Fair value changes recognized in other comprehensive income (OCI I)
+Transferred to profit or loss (OCI I)
+-2,711
+-70
+-2,707
+-5
+-76
+3,393
+6
+-2,782
+-2,783
+1
+Deferred taxes relating to cash flow hedges (OCI I)
+860
+861
+0
+Cash flow hedges (OCI I), net of tax
+Consolidated Financial Statements
+Cash flow hedges (OCI I), before tax
+-86
+4
+Deferred taxes relating to exchange differences on translating foreign operations
+Exchange differences on translating foreign operations, net of tax
+-13
+Share of other comprehensive income of equity-accounted investments
+that will not be reclassified to profit or loss, net of tax
+Items that will not be reclassified to profit or loss
+1
+-2
+3
+4,128
+4,102
+27
+4
+Exchange differences on translating foreign operations
+3,389
+3,336
+53
+0
+0
+Exchange differences on translating foreign operations, before tax
+3,390
+3,337
+53
+Gains/losses on currency translation recognized in other comprehensive income
+Transferred to profit or loss
+-3,150
+-4,612
+-2,843
+-1,922
+-1,922
+3
+38,947
+47,241
+222,884
+-183,937
+-202,959
+2
+250,200
+0
+1
+2021
+Note
+Income Statement
+Volkswagen AG hybrid capital investors
+Noncontrolling interests
+of which attributable to
+Earnings after tax
+Deferred
+Current
+2020
+Income tax income/expense
+Fair value changes recognized in other comprehensive income (OCI II)
+-612
+-61
+-61
+Fair value valuation of debt instruments that may be reclassified to profit or loss
+Fair value changes recognized in other comprehensive income
+-1
+342
+341
+Cash flow hedges (OCI II), net of tax
+0
+-161
+-613
+-161
+-1
+503
+502
+Cash flow hedges (OCI II), before tax
+0
+1,114
+1,114
+Transferred to profit or loss (OCI II)
+-1
+Deferred taxes relating to cash flow hedges (OCI II)
+0
+Earnings before tax
+Other financial result
+19,275
+9,675
+7
+2,321
+2,756
+8
+810
+793
+8
+-13,904
+-1,818
+9
+-463
+733
+851
+1,991
+20,126
+11,667
+10
+-4,698
+-2,291
+Financial result
+-13,049
+12,438
+Interest expenses
+Interest income
+Share of the result of equity-accounted investments
+Operating result
+Other operating expenses
+Other operating income
+Administrative expenses
+Distribution expenses
+Gross result
+6
+Cost of sales
+of the Volkswagen Group for the period January 1 to December 31, 2021
+Income Statement
+€ million
+Consolidated Financial Statements
+4
+-10,420
+-9,399
+5
+14,731
+Sales revenue
+Balance Sheet
+Pension plan remeasurements recognized in other comprehensive income, net of tax
+Fair value valuation of equity instruments that will not be reclassified to profit or loss,
+net of tax
+Consolidated Financial Statements
+hedges
+(OCI I)
+Deferred costs
+Cash flow
+Equity
+Equity
+HEDGING
+225
+Statement of Changes in Equity
+Consolidated Financial Statements
+of hedging
+-2,351
+14,551
+1,283
+217
+-32
+-269
+-2,419
+54
+3,340
+18,986
+117,342
+3,340
+Equity and debt
+attributable to
+Volkswagen AG
+hybrid capital
+8,867
+533
+123,651
+1,870
+121,781
+12,663
+295
+-235
+-977
+Equity-
+accounted
+95
+Noncontrolling
+interests
+investors
+investors
+investments
+instruments
+(OCI II)
+hybrid capital
+Volkswagen AG
+shareholders and
+attributable to
+Total equity
+-43
+4,143
+-5,659
+reserve
+capital
+Capital
+Subscribed
+OTHER RESERVES
+Explanatory notes on equity are presented in the note relating to equity.
+2 For the change in capital transactions involving a change in ownership interest see the "Key events" section.
+1 Redemption of hybrid note issued in fiscal year 2014.
+Balance at Dec. 31, 2021
+Retained
+earnings
+Other changes
+Dividends payment
+Capital increases/Capital decreases¹
+Disposal of equity instruments
+Total comprehensive income
+Other comprehensive income, net of tax
+Earnings after tax
+Balance at Jan. 1, 2021
+Balance at Dec. 31, 2020
+Other changes
+Capital transactions involving a change in ownership interest²
+14,843
+Currency
+translation
+1,283
+100,772
+14,551
+1,283
+-5,659
+100,772
+14,551
+1,283
+1
+22
+reserve
+-166
+5
+-2,836
+6,400
+-2,836
+-1,933
+8,334
+-2,824
+96,929
+14,551
+-2,419
+Capital transactions involving a change in ownership interest
+8,824
+269
+-1,068
+170
+-1,237
+-1,237
+-54
+21,958
+133
+21,825
+539
+-576
+621
+342
+-1,922
+6,529
+87
+6,442
+621
+-82
+342
+-1,922
+-82
+15,428
+-2,994
+-3,022
+Cash flow statement
+226
+146,154
+1,705
+144,449
+14,439
+541
+-355
+-367
+-28
+-635
+-16
+108
+-109
+-590
+-288
+-302
+-1
+0
+0
+93
+1,192
+46
+539
+-61
+-2,891
+-472
+2,989
+2,989
+2,989
+-5
+5,249
+-88
+-2,952
+5,337
+-242
+21
+269
+1,192
+-3,575
+-45
+-3,530
+-242
+21
+533
+15,383
+-166
+-238
+128,783
+1,734
+127,049
+15,713
+30
+-219
+-708
+of the Volkswagen Group as of December 31, 2021
+128,783
+-72
+1,734
+15,713
+30
+-219
+-708
+1,287
+84
+85
+-1
+-23
+127,049
+Dividends payment
+1,287
+Disposal of equity instruments
+Cash, cash equivalents and time deposits
+21,162
+22,532
+22
+Marketable securities
+1,186
+1,618
+19
+Tax receivables
+23
+7,381
+18
+Other receivables
+13,234
+12,584
+17
+58,006
+56,498
+16
+16,243
+7,473
+15,521
+39,723
+Assets held for sale
+Other financial liabilities
+Financial liabilities
+Noncurrent liabilities
+Noncontrolling interests
+Equity attributable to Volkswagen AG shareholders and hybrid capital investors
+Equity attributable to Volkswagen AG hybrid capital investors
+Other reserves
+Retained earnings
+Capital reserve
+33,909
+Subscribed capital
+Equity and liabilities
+€ million
+Consolidated Financial Statements
+497,114
+528,609
+Total assets
+194,944
+200,347
+674
+Equity
+Other liabilities
+-18,407
+43,725
+15
+10,080
+12,531
+15
+558
+615
+14
+50,686
+59,699
+3,000
+14, 33
+63,695
+13, 33
+67,968
+77,689
+12
+Dec. 31, 2020
+Dec. 31, 2021
+Capital increases/Capital decreases
+Note
+63,884
+43,823
+1,865
+84,954
+20
+Other financial assets
+Financial services receivables
+Trade receivables
+Inventories
+Current assets
+302,170
+328,261
+13,486
+16
+13,393
+376
+635
+19
+2,867
+18
+7,834
+9,156
+17
+82,565
+19
+Deferred tax liabilities
+2,895
+Provisions for taxes
+10,590
+13,002
+26
+340
+614
+28
+22,677
+23,624
+31
+27
+88,648
+25
+202,921
+218,062
+22,688
+23,474
+30
+3,292
+3,392
+28
+78,584
+45,081
+19,890
+28
+Total comprehensive income
+Other comprehensive income, net of tax
+Provisions for pensions
+Earnings after tax
+Balance at Jan. 1, 2020
+€ million
+of the Volkswagen Group for the period January 1 to December 31, 2021
+Statement of Changes in Equity
+Consolidated Financial Statements
+17,979
+Statement of Changes in Equity
+497,114
+528,609
+165,410
+164,393
+238
+25,578
+30
+2,213
+2,863
+224
+41,550
+22,964
+4,890
+14,551
+1,283
+1,283
+24
+Dec. 31, 2020
+Dec. 31, 2021
+Note
+223
+Balance Sheet
+14,551
+Total equity and liabilities
+Provisions for taxes
+Other liabilities
+Other financial liabilities
+Tax payables
+Trade payables
+29
+Other provisions
+Financial liabilities
+Current liabilities
+Other provisions
+117,342
+Liabilities associated with assets held for sale
+-3,167
+7,905
+8,430
+100,772
+28
+5,131
+27
+4,257
+26
+114,809
+131,618
+4,466
+128,783
+-5,270
+1,734
+1,705
+146,154
+14,439
+15,713
+25
+127,049
+144,449
+Equity interests
+Consideration transferred
+€ million
+235
+Notes to the Consolidated Financial Statements
+1,109
+2,894
+Total liabilities
+8,599
+Fair value of equity interests held previously
+Balance of net assets acquired
+Consolidated Financial Statements
+less
+2,783
+Preliminary
+goodwill
+calculation
+3,266
+3
+624
+1,109
+The consideration transferred includes an amount of €126 million for winding down pre-existing relationships.
+This corresponds to the fair value of the Volkswagen Group's receivables from and liabilities to Navistar recognized
+as of the acquisition date. The fair value of an amount receivable by MAN Truck & Bus from Navistar arising from
+the termination of a development project exceeds the previously recognized carrying amount by €12 million.
+The difference was recognized through profit or loss in other operating income.
+Receivables and financial assets include the following groups of receivables for which the gross amounts differ
+from the fair values:
+€ million
+Financing business receivables
+Lease receivables
+Amount expected
+Other current liabilities and provisions
+Other receivables
+Trade receivables
+Net assets acquired
+Goodwill
+3,322
+3,542
+695
+Deferred tax assets
+Total assets
+Gross amount to be uncollectible
+Preliminary
+fair values
+as of
+July 1, 2021
+3,118
+126
+22
+3,266
+Preliminary
+fair values
+as of
+July 1, 2021
+2,163
+736
+917
+316
+Other noncurrent liabilities and provisions
+114
+Deferred tax liabilities
+1,066
+Provisions for pensions and similar obligations
+509
+Current financial liabilities
+Noncurrent financial liabilities
+600
+565
+1,732
+1,045
+369
+621
+9,709
+924
+80
+201
+145
+803
+736
+80
+78
+284
+284
+83
+135
+119
+1,529
+1,442
+The list of all shareholdings that forms part of the annual financial statements of Volkswagen AG can be
+downloaded from the electronic companies register at www.unternehmensregister.de and from
+www.volkswagenag.com/ir.
+238
+144
+Notes to the Consolidated Financial Statements
+The following consolidated German subsidiaries with the legal form of a corporation or partnership have met
+the criteria set out in section 264(3) or section 264b of the Handelsgesetzbuch (HGB - German Commercial Code)
+and have as far as possible exercised the option not to publish annual financial statements:
+> ARTEMIS GmbH, Wolfsburg
+> AUDI AG, Ingolstadt
+> Audi Berlin GmbH, Berlin
+> Audi Frankfurt GmbH, Frankfurt am Main
+> Audi Hamburg GmbH, Hamburg
+> Audi Hannover GmbH, Hanover
+> AUDI Immobilien GmbH & Co. KG, Ingolstadt
+> Audi Leipzig GmbH, Leipzig
+> Audi München GmbH, Munich
+> Audi Sport GmbH, Neckarsulm
+> Audi Stuttgart GmbH, Stuttgart
+Cash funds
+> Auto & Service PIA GmbH, Munich
+Consolidated Financial Statements
+15
+2020
+Germany
+Abroad
+36
+501
+15
+512
+1
+The transaction costs of €34 million incurred up to December 31, 2021 for implementing the business combination
+were recognized in administrative expenses.
+As a result of the consolidation of Navistar as of July 1, 2021, the Volkswagen Group's sales revenue increased
+by €3,494 million as of December 31, 2021, while earnings after tax, including amortization on realized hidden
+reserves, decreased by €217 million.
+If Navistar had been included in the consolidated financial statements of the Volkswagen Group as a fully
+consolidated subsidiary since January 1, 2021, consolidated sales revenue after consolidation reported as of
+December 31, 2021 would have amounted to €253,802 million, and profit after tax would have been €526 million
+lower, at €14,942 million.
+236
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Effects of climate change
+Against the backdrop of climate change and the resulting stricter emissions regulations, the transformation of
+the automotive industry towards e-mobility and further digitalization continues to make progress. In its NEW AUTO
+strategy, the Volkswagen Group has again stepped up the pace of its transformation towards e-mobility.
+In the preparation of the consolidated financial statements, the Board of Management took into account
+the potential effects of climate changes and future regulatory requirements, and especially the corresponding
+transformation towards e-mobility. Potential effects, especially on noncurrent assets, provisions for emissions
+levies and future cash flows were, as far as possible, incorporated as part of the significant estimates and
+assumptions included in the consolidated financial statements. The effects of the transformation towards
+e-mobility are taken into account in compiling the medium-term planning and therefore in the calculation of
+future cash flows for determining recoverable amounts in impairment tests of goodwill and intangible assets
+with indefinite useful lives, especially when planning future vehicle models and in the context of investments
+in development costs and production facilities. In addition, Volkswagen regularly assesses whether these
+developments give rise to the need for ad hoc impairment tests or for adjustments to the useful lives of other
+noncurrent non-financial assets. With reference to increasingly stringent emissions regulations, it is ensured that
+the various international regulations are taken into account and that any obligations are recognized appropriately.
+This did not result in any material effects on the consolidated financial statements. The increase in development
+costs in the areas of e-mobility and digitalization have, however, led to a corresponding increase in internally
+generated intangible assets. For more information, please refer to the "Accounting policies" section.
+2021
+For a detailed presentation of how sustainability is taken into account within the Group strategy, in the
+management of the Group and in Group planning, please refer to the sections entitled “Goals and Strategies”
+and "Sustainable Value Enhancement" in the group management report.
+Notes to the Consolidated Financial Statements
+237
+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 are 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:
+Volkswagen AG and consolidated subsidiaries
+Germany
+Abroad
+Subsidiaries carried at cost
+Germany
+Abroad
+Associates, joint ventures and other equity investments
+Consolidated Financial Statements
+Current receivables and financial assets
+Feb. 12, 2021
+Noncurrent receivables and financial assets
+Adjustments to the corresponding
+explanatory notes. Primarily choice
+not to present the legal require-
+ments.
+IAS 1
+Disclosure of Accounting Policies
+Feb. 12, 2021
+Jan. 1, 2023
+No
+IAS 8
+Definition of Accounting Estimates
+Jan. 1, 2023
+No
+No material impact
+Deferred taxes on leases and
+decommissioning and
+IAS 12
+No material impact
+restoration liabilities
+Jan. 1, 2023
+No
+No material impact
+Property, Plant and Equipment:
+IAS 16
+Proceeds before intended use
+May 14, 2020
+Jan. 1, 2022
+Yes
+No material impact
+IAS 37
+Onerous contracts - cost of fulfilling
+a contract
+May 14, 2020
+Annual Improvements 2018 - 20203
+May 7, 2021
+May 14, 2020
+No
+Jan. 23, 2020
+> Autostadt GmbH, Wolfsburg
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+229
+New and amended IFRSS not applied
+In its 2021 consolidated financial statements, Volkswagen AG did not apply the following accounting pronouncements
+that have been adopted by the IASB until December 31, 2021, but were not yet required to be applied for the
+fiscal year.
+Standard/Interpretation
+Published by the
+IASB
+Application
+mandatory¹
+Adopted by
+the EU
+Expected impact
+IFRS 3
+Updating a Reference to the
+Conceptual Framework
+IFRS 17
+Jan. 1, 2023
+Insurance Contracts
+Jan. 1, 2022
+Jan. 1, 2023
+Yes
+No material impact
+Yes²
+No material impact
+Insurance Contracts - several
+IFRS 17
+amendments
+June 25, 2020
+Jan. 1, 2023
+Yes²
+No material impact
+IAS 1
+Classification of liabilities as current
+or non-current
+May 18, 2017
+Jan. 1, 2022
+Jan. 1, 2022
+Yes
+No material impact
+In mid-June 2021, Volkswagen and the Swedish battery cell producer Northvolt AB agreed to concentrate production
+of Volkswagen premium cells in Skellefteå, Sweden. In connection with this, Volkswagen participated in a financing
+round at Northvolt AB that was proportionate to its shareholding, investing a further USD 650 million in the
+company. Volkswagen also increased its existing convertible loan by a further €190 million and, at the same
+time, converted this part of the loan to preferred shares. This increased Volkswagen's ownership interest in
+Northvolt AB to 23.6%. Due to favorable terms and conditions on conversion, the measurement of the converted
+loan resulted in non-cash income of €62 million. As a result, the carrying amount of the equity investment in
+Northvolt AB rose by €796 million. A convertible loan of €240 million remains on issue.
+The sale of MAN Truck & Bus Österreich GesmbH, Steyr/Austria (MTBÖ) as part of restructuring measures was
+completed with effect from August 31, 2021. The assets and liabilities of MTBÖ were presented as a disposal group
+in the financial statements of the Volkswagen Group until the date of sale. The sale led to the recognition of an
+expense, of which €160 million was mainly attributable to impairment losses on property, plant and equipment
+and €144 million to a loss on deconsolidation. The total expense of €304 million is presented in other operating
+expenses. The sale of the shares in MTBÖ resulted in a net cash outflow of €199 million, which is presented in
+cash flows from investing activities.
+At the end of July 2021, the Volkswagen Supervisory Board approved an agreement with investment firm Attestor
+Limited and with Pon Holdings B.V. for the submission of a joint public takeover offer for the shares of Europcar
+Mobility Group S.A., Paris/France through a consortium company.
+Following a successful review of the offer documents, the French regulator approved the takeover offer at the
+end of November 2021. The period during which Europcar shareholders can tender their shares started at the end
+of November 2021 and will end when antitrust approval is granted. Together with its two partners, Volkswagen
+is offering a price of €0.50 per Europcar share through the consortium company. If more than 90% of the shares
+are tendered, an additional one cent per share will be paid. As matters stand, the consortium will assume joint
+control of Europcar if the offer is accepted.
+Volkswagen is the writer of put options held by the other members of the consortium, and the other members
+have granted Volkswagen call options on their shares in the consortium company. The measurement of the
+options led to a non-cash expense of €103 million in fiscal year 2021, which was recognized in the financial result.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+233
+In 2021, the Volkswagen Group and Rimac Automobili d.o.o., Sveta Nedelja/Croatia (Rimac), established Bugatti
+Rimac d.o.o., which has its headquarter in Sveta Nedelja. Volkswagen has contributed its consolidated subsidiaries
+Bugatti Automobiles S.A.S, Molsheim/France and an initial 51% of Bugatti International S.A., Strassen/Luxembourg.
+After proportional profit elimination, the contribution resulted in a non-cash gain of €124 million, which was
+recognized in the other operating result. Rimac holds 55% of the shares in the company and Volkswagen holds 45%
+through Dr. Ing. h.c. F. Porsche AG (Porsche). In addition, Porsche holds a direct interest of 22% in Rimac. In
+the consolidated financial statements, both equity investments are reported under equity-accounted investments.
+Initially, Bugatti Rimac d.o.o. will produce two hypercar models, the Bugatti Chiron and the Rimac Nevera.
+It is envisaged that further in the future the activities of Bugatti Rimac d.o.o. will focus on a joint product portfolio
+under the Bugatti brand name with the aim of developing, producing and selling electric-powered, luxury hyper
+sports cars.
+To expand its battery expertise, Volkswagen acquired an interest in Gotion High-Tech Co., Ltd., Hefei/China
+(Gotion) through Volkswagen (China) Investment Co. Ltd., and is now the largest shareholder of the Chinese
+battery supplier with an interest of 26%. The Group spent a total of €1.2 billion on this transaction. The investment
+is accounted for using the equity method.
+Acquisition of Navistar
+On July 1, 2021, a TRATON GROUP company acquired all of the outstanding shares in Navistar International
+Corporation (Navistar), a US manufacturer of commercial vehicles based in Lisle, Illinois/USA. The purchase price
+of €3,118 million (USD 3,700 million) was paid in cash. TRATON SE now indirectly holds 100% of the shares in
+Navistar International Corporation, which was previously accounted for using the equity method (interest of
+16.7%). Trading in Navistar shares on the New York Stock exchange has been discontinued.
+Due to the size of the transaction, initial recognition of the acquisition has not yet been finalized as the
+internal reviews of the information underlying the purchase price allocation have not yet been completed.
+This means that the amounts recognized as of December 31, 2021 are provisional.
+The acquisition resulted in goodwill in the amount of €2,783 million to reflect the synergies arising from the
+operation with Navistar. These relate particularly to the growth in the share of the market, to procurement,
+production costs, modularization and the use of shared components, and to the area of research and development.
+The fair value of the equity interest in Navistar that TRATON GROUP had held immediately prior to the
+acquisition date was determined on the basis of the share price of USD 44.50/share at the acquisition date; it
+amounts to €624 million. The remeasurement of this equity interest resulted in a gain of €219 million. Moreover,
+the derecognition of the equity accounted investment during the initial consolidation of Navistar resulted in
+income and expenses previously recognized directly in equity being reclassified to the income statement,
+which led to an expense of €37 million. This in turn resulted in a gain of €182 million, which is presented in
+the share of the result of equity-accounted investments.
+The merger of MAN SE with TRATON SE was entered in the commercial register for MAN SE and TRATON SE on
+August 31, 2021. The squeeze-out took legal effect on the date of this entry in the commercial register. This was
+followed on September 3, 2021 by the disbursement of the cash settlement of €70.68 per ordinary and preferred
+share to the noncontrolling interest shareholders of MAN SE, thus completing the MAN SE squeeze-out. Judicial
+award proceedings initiated by noncontrolling interest shareholders who had received a settlement as a result of
+the squeeze-out are underway to review whether the cash settlement is appropriate.
+234
+Consolidated Financial Statements
+The preliminary allocation of the purchase price to the assets acquired and liabilities assumed is as follows:
+€ million
+Consideration transferred
+Cash
+Unwinding of pre-existing relationships
+Exchange of share-based payment awards
+Total
+€ million
+Net assets acquired
+Intangible assets
+of which Customer relationships
+of which Brand names
+Property, plant and equipment
+Lease assets
+Other equity investments
+Notes to the Consolidated Financial Statements
+The merger of MAN SE with TRATON SE was adopted by resolution of the Annual General Meeting of MAN SE on
+June 29, 2021. The merger resolution also triggered the process to transfer the shares held by the noncontrolling
+interest shareholders of MAN SE to TRATON SE against payment of an appropriate cash settlement (merger
+squeeze-out). In this context, the present value of the put options granted, amounting to approximately
+€587 million, was recognized as a current liability directly in equity. The noncontrolling interests in the
+Volkswagen Group's equity, as well as the retained earnings and other reserves attributable to the shareholders
+of Volkswagen AG declined accordingly.
+Material Transactions
+Consolidated Financial Statements
+Yes
+No material impact
+1 Effective date from Volkswagen AG's perspective.
+2 The EU's endorsement includes an option that exempts companies from applying a valuation requirement in certain cases.
+3 Minor amendments to a number of IFRSS (IFRS 1, IFRS 9 and IAS 41).
+230
+Notes to the Consolidated Financial Statements
+Key events
+Consolidated Financial Statements
+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 (NOx) emissions had been discovered in emissions tests on
+certain Volkswagen Group vehicles with 2.01 diesel engines in the USA. In this context, Volkswagen AG announced
+that noticeable discrepancies between the figures recorded in testing and those measured in actual road use had
+been identified in type EA 189 diesel engines and that this engine type had been installed in roughly eleven
+million vehicles worldwide. 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 1 diesel engines.
+The so-called 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. This software function was developed and imple-
+mented from 2006 on without knowledge at the level of the Board of Management. Members of the Board of
+Management did not learn of the development and implementation of this software function until the summer
+of 2015.
+There are furthermore no findings that, following the publication in May 2014 of the study by the International
+Council on Clean Transportation, an unlawful “defeat device” under US law was disclosed to the persons
+responsible for preparing the 2014 annual and consolidated financial statements as the cause of the high NOx
+emissions in certain US vehicles with 2.01 type EA 189 diesel engines. Rather, at the time the 2014 annual and
+consolidated financial statements were being prepared, the persons responsible for preparing these financial
+statements remained under the impression that the issue could be resolved with comparatively little expense.
+In the course of the summer of 2015, however, it became progressively 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 that was later identified as an unlawful “defeat device" as defined by US
+law. This culminated in Volkswagen's disclosure of a “defeat device" to the EPA and the California Air Resources
+Board, a department of the Environmental Protection Agency of the State of California, on September 3, 2015.
+According to the assessment at the time by the responsible persons dealing with the matter, the magnitude of
+the costs expected to result for the Volkswagen Group (recall costs, retrofitting costs, and financial penalties)
+was not fundamentally dissimilar to that in previous cases involving other vehicle manufacturers. It therefore
+appeared to be manageable overall considering the business activities of the Volkswagen Group. This assessment by
+Volkswagen AG was based, among other things, on the advice of a law firm engaged in the USA for regulatory
+approval issues, according to which similar cases had in the past been amicably resolved 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 2021, special items in connection with the diesel issue amounted to €750.8 million; they were
+mainly recognized in the other operating result. These special items were attributable to additional expenses of
+€967.6 million primarily for legal risks. This was offset by income from damage settlements and income from
+the reversal of provisions for warranties that are no longer required. The income from damage settlements of
+€216.8 million was brought about by agreements with former members of the Board of Management entered
+into in June 2021 with the goal of achieving speedy, legally certain, and final resolution of the diesel issue as far
+as the civil liability of members of governing bodies was concerned. To this end, Volkswagen and Audi entered
+into damage settlements (liability settlements) with Prof. Dr. Winterkorn and Mr. Stadler respectively in connec-
+tion with the diesel issue. Prof. Dr. Winterkorn's damage payment amounts to €11.2 million and that of
+Mr. Stadler to €4.1 million. In addition, provisions of €3.1 million were reversed in this context. Volkswagen has
+furthermore reached agreement with the relevant insurers under its directors and officers liability policies
+(D&O insurance) on payment of an aggregate sum of €270 million (coverage settlement), of which €195.9 million
+was recognized in profit or loss.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+231
+Notes to the Consolidated Financial Statements
+232
+Please also refer to the comments in the 2021 group management report, specifically in the chapters entitled
+Business Development, Results of Operations, Financial Position and Net Assets, Report on Expected Develop-
+ments and Report on Risks and Opportunities.
+The semiconductor shortage and the resulting supply bottlenecks had an increasingly negative impact across
+the entire industry. This also affected production in the Volkswagen Group. As a result, the Volkswagen Group
+recorded a reduction in inventories of finished goods and a simultaneous increase in raw materials and work in
+progress in the fiscal year (see also the information provided in the section entitled "Inventories").
+Many restrictive measures were eased in the course of 2021 for reasons that include the rising vaccination rate.
+In the consolidated financial statements as of December 31, 2021, no material impairment losses attributable to
+the Covid-19 pandemic had to be recognized.
+Effects of the Covid-19 pandemic / shortage of semiconductors
+Inventories
+In September 2017, the European Commission fined Scania €0.88 billion. Scania appealed to the European
+Court of Justice in Luxembourg and mounted a comprehensive defense. In a judgment rendered in February 2022,
+the European General Court (Court of First Instance) rejected Scania's appeal in its entirety. Scania is currently
+analyzing the judgment and will in timely fashion decide whether to appeal it to the European Court of Justice.
+Scania had already recognized a provision of €0.4 billion in 2016 and increased this provision to approximately
+€0.9 billion in the reporting year.
+Volkswagen accepted the decision, which was served on July 12, 2021, and filed no appeal, thus allowing the
+decision to become final.
+In April 2019, the European Commission issued an initial 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 stated the European Commission's preliminary evaluation of the matter and afforded
+the opportunity to comment. Following entry into a formal settlement procedure, in April 2021 the Commission
+issued a revised statement of objections raising charges that were considerably more narrow. On this basis, a
+settlement decision was issued on July 8, 2021 concluding the administrative action and assessing a total fine of
+roughly €502 million against the three brands. This amount has been recognized under other operating expenses.
+The subject matter scope of the decision is limited to the cooperation of German automobile manufacturers on
+individual technical questions in connection with the development and introduction of SCR (selective catalytic
+reduction) systems 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.
+Antitrust investigations
+Further information on the litigation in connection with the diesel issue can be found in the “Litigation”
+section.
+by a former member of Porsche's Board of Management. One former member of Audi's Board of Management was
+unwilling to reach a settlement; legal action is being prepared against him. Claims were already asserted against a
+former member of the Volkswagen Passenger Cars brand Board of Management. The Annual General Meeting of
+Volkswagen AG gave its approval to these agreements on July 22, 2021.
+In addition, agreement was reached on damage payments by a former member of Audi's Board of Management and
+In 2011, the European Commission conducted searches at European truck manufacturers for suspected unlawful
+exchange of information during the period from 1997 to 2011; in November 2014, the Commission issued a
+statement of objections to MAN, Scania, and the other truck manufacturers concerned. In its settlement decision
+of July 2016, the European Commission assessed fines against 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.
+> Bugatti Engineering GmbH, Wolfsburg
+May 14, 2020
+> Dr. Ing. h.c. F. Porsche AG, Stuttgart
+> Porsche Immobilien GmbH & Co. KG, Stuttgart
+> Porsche Investments 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
+> Schwaba GmbH, Augsburg
+> SKODA AUTO Deutschland GmbH, Weiterstadt
+> CARIAD SE, Wolfsburg
+> Porsche Holding Stuttgart GmbH, Stuttgart
+> Porsche Financial Services GmbH, Bietigheim-Bissingen
+> SEAT Deutschland Niederlassung GmbH, Frankfurt am Main
+> Porsche Erste Beteiligungsgesellschaft mbH, Stuttgart
+> Porsche Financial Services GmbH & Co. KG, Bietigheim-Bissingen
+> dx.one GmbH, Chemnitz
+> 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
+> MAHAG Automobilhandel und Service GmbH & Co. oHG, Munich
+> MAHAG GmbH, Munich
+> MAHAG Sportwagen Zentrum Albrechtstraße GmbH, Munich
+> GETAS Verwaltung GmbH & Co. Objekt Augsburg KG, Pullach i. Isartal
+> MOIA GmbH, Berlin
+> MOIA Operations Germany GmbH, Hanover
+> Porsche Consulting GmbH, Bietigheim-Bissingen
+> Porsche Deutschland GmbH, Bietigheim-Bissingen
+> Porsche Dienstleistungs GmbH, Stuttgart
+> Porsche Digital GmbH, Stuttgart
+> Porsche Engineering Group GmbH, Weissach
+> MAN Energy Solutions SE, Augsburg
+> Porsche Engineering Services GmbH, Bietigheim-Bissingen
+3,936
+399
+46,282
+1,785
+126
+20,350
+23,446
+1,776
+6
+62
+5
+38
+-
+4,937
+2,187
+7,528
+25
+Total comprehensive income
+Sales revenue
+Earnings after tax from discontinued operations
+1,272
+843
+130
+of which financial liabilities²
+Current liabilities
+12,759
+10,601
+Other comprehensive income
+4,291
+Net assets
+Depreciation and amortization
+Interest income
+Interest expenses
+Earnings before tax from continuing operations
+Income tax expense
+Earnings after tax from continuing operations
+of which financial liabilities²
+444
+RECONCILIATION OF THE FINANCIAL INFORMATION TO THE CARRYING AMOUNT OF THE EQUITY-ACCOUNTED INVESTMENTS
+3,665
+Profit or loss
+Other comprehensive income
+Changes in share capital
+Changes in reserves
+FAW-Volkswagen
+Automotive
+Company
+SAIC-Volkswagen
+Automotive
+SAIC-Volkswagen
+Company
+Sales Company
+7,528
+3,936
+399
+3,837
+907
+Net assets at January 1
+2021
+€ million
+1,062
+1,743
+347
+24
+3,689
+-9
+1,734
+347
+1,308
+118
+1,230
+Dividends received³
+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.
+2 Excluding trade liabilities.
+3 Proportionate dividends are shown net of withholding tax.
+246
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+149
+Noncurrent liabilities
+1,309
+2,711
+74
+5
+Abroad
+Germany
+Consolidated Financial Statements
+Liquidations
+Sales/other
+Mergers
+Deconsolidated
+Newly formed subsidiaries
+Newly acquired subsidiaries
+Subsidiaries previously carried at cost
+Initially consolidated
+Number
+The fiscal year's changes in the consolidated Group are shown in the following table:
+CONSOLIDATED SUBSIDIARIES
+0
+3
+1
+9
+As of December 31, 2021, the quoted market price of the shares in Sinotruk amounted to €938 million
+(previous year: €1,436 million).
+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. Sinotruk's principal place of business is in Hongkong, China.
+Sinotruk
+From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong, China (Sinotruk), Bertrandt AG,
+Ehningen, Germany (Bertrandt), and There Holding B.V., Rijswijk, the Netherlands (There Holding), were material
+at the reporting date.
+INVESTMENTS IN ASSOCIATES
+With the exception of the acquisition of Navistar, 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.
+19
+Notes to the Consolidated Financial Statements
+7
+1
+3
+1
+8
+5
+86
+6
+8
+123
+240
+Notes to the Consolidated Financial Statements
+106
+Equity interest in %
+40
+50
+30
+Noncurrent assets
+11,504
+8,871
+932
+Current assets
+9,844
+6,509
+3,889
+of which cash and cash equivalents
+3,525
+938
+312
+2020
+Dividends received³
+> Volkswagen Zweite Leasingobjekt GmbH, Braunschweig
+> Volkswagen Zubehör GmbH, Dreieich
+215
+104
+Earnings after tax from continuing operations
+3,837
+907
+239
+312
+Other comprehensive income
+-4
+-8
+Total comprehensive income
+3,833
+899
+312
+Earnings after tax from discontinued operations
+-4
+-868
+Foreign exchange differences
+238
+69
+85
+92
+674
+11
+40
+187
+238
+The cumulative income and expenses in connection with the disposal groups held for sale are recognized in other
+comprehensive income; they amount to €14.7 million (of which €1.1 million is attributable to noncontrolling
+interests).
+248
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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 generally applied
+to determine the proportionate equity, based on the most recent audited annual financial statements of each
+company.
+191
+Dec. 31, 2021
+Liabilities associated with assets held for sale
+Other liabilities
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+247
+IFRS 5 - NONCURRENT ASSETS HELD FOR SALE
+On March 26, 2021, Brose Fahrzeugteile SE & Co. Kommanditgesellschaft (Brose) and VW Finance Luxemburg S.A.,
+a subsidiary of Volkswagen AG, entered into an agreement to establish a jointly operated company for the
+development and manufacture of complete seat units, seat structures and components, and solutions for the
+vehicle interior. As part of this arrangement, Brose has acquired half of the shares of the Volkswagen Group
+company SITECH Sp. Z o.o., Polkowice/Poland. Brose and Volkswagen each hold 50% of the jointly operated company,
+whereby Brose will take the industrial lead. Consequently, Brose will control the jointly operated company and
+Volkswagen, given its significant influence following the transaction, will account for it as an associate using the
+equity method. Once all closing conditions had been met, the transaction was completed on January 1, 2022.
+In accordance with IFRS 5, SITECH Sp. Z o.o., Polkowice/Poland, and its consolidated subsidiaries SITECH Sitz-
+technik GmbH and SITECH Dongchang Automotive Seating Technology Limited, Shanghai/China, were classified
+as a disposal group held for sale as of December 31, 2021, which was recognized at its carrying amount.
+There are also plans to sell property, plant and equipment in an amount of €21 million in fiscal year 2022. These
+items of property, plant and equipment were classified as held for sale in accordance with IFRS 5. The sale will
+not have any material effect on the Volkswagen Group's results of operations or net liquidity. The sale of the
+property, plant and equipment is expected to be completed in the first quarter of fiscal year 2022.
+The assets and liabilities held for sale have been recognized at the lower of their carrying amount and fair value
+less expected costs of disposal and presented in separate balance sheet items. The main groups of assets and
+liabilities classified as held for sale are shown below.
+In the case of subsidiaries consolidated for the first time, assets and liabilities are generally 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 at least 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 is 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; they are recognized as expenses in the period in which they are incurred.
+€ million
+Property, plant and equipment
+Inventories
+Cash and securities
+Other assets
+Assets held for sale
+Financial liabilities
+Provisions
+Intangible assets
+There were unrecognized losses of €2 million (previous year: €26 million) relating to investments in joint ventures.
+Contingent liabilities to joint ventures amounted to €239 million (previous year: €248 million), while financial
+guarantees stood at €70 million (previous year: €70 million). Cash funds of joint ventures amounting to
+€185 million (previous year: €197 million) are deposited as collateral for asset-backed securities transactions and
+are therefore not freely available.
+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.
+> Volkswagen Vermögensverwaltungs-GmbH, Wolfsburg
+> Volkswagen Automobile Region Hannover GmbH, Hanover
+> VOLKSWAGEN Automobile Leipzig GmbH, Leipzig
+> Volkswagen Automobile Hannover GmbH, Hanover
+> Volkswagen Automobile Hamburg GmbH, Hamburg
+> Volkswagen Automobile Frankfurt GmbH, Frankfurt am Main
+> Volkswagen Automobile Chemnitz GmbH, Chemnitz
+> Volkswagen Automobile Berlin GmbH, Berlin
+> Volkswagen AirService GmbH, Braunschweig
+> Volkswagen ADMT Hannover GmbH, Hanover
+> VGRHH GmbH, Hamburg
+> VGRD GmbH, Wolfsburg
+> VGRB GmbH, Berlin
+> VfL Wolfsburg-Fußball GmbH, Wolfsburg
+> SZM Sportwagen Zentrum München GmbH, Munich
+Consolidated Financial Statements
+> Volkswagen Automobile Rhein-Neckar GmbH, Mannheim
+> Volkswagen Automobile Stuttgart GmbH, Stuttgart
+> Volkswagen Beteiligungsverwaltung GmbH, Wolfsburg
+> Volkswagen Deutschland GmbH & Co. KG, Wolfsburg
+> Volkswagen Software Asset Management GmbH, Wolfsburg
+> Volkswagen Siebte Leasingobjekt GmbH, Braunschweig
+> Volkswagen Sechste Leasingobjekt GmbH, Braunschweig
+> Volkswagen Sachsen GmbH, Zwickau
+> Volkswagen Osnabrück GmbH, Osnabrück
+> Volkswagen Original Teile Logistik GmbH & Co. KG, Baunatal
+> Volkswagen Konzernlogistik GmbH & Co. OHG, Wolfsburg
+> Volkswagen Vierte Leasingobjekt GmbH, Braunschweig
+> Volkswagen Immobilien GmbH, Wolfsburg
+> Volkswagen Group Real Estate GmbH & Co. KG, Wolfsburg
+> Volkswagen Group IT Services GmbH, Wolfsburg
+> Volkswagen Gebrauchtfahrzeughandels und Service GmbH, Langenhagen
+> Volkswagen Fünfte Leasingobjekt GmbH, Braunschweig
+> Volkswagen Erste Leasingobjekt GmbH, Braunschweig
+> Volkswagen Dritte Leasingobjekt GmbH, Braunschweig
+> Volkswagen Deutschland Verwaltungs GmbH, Wolfsburg
+> Volkswagen Group Services GmbH, Wolfsburg
+-8
+3,447
+-20
+734
+117
+2020
+Net assets at January 1
+Profit or loss
+Other comprehensive income
+Changes in share capital
+Changes in reserves
+Foreign exchange differences
+Dividends¹
+Net assets at December 31
+Proportionate equity
+Consolidation/Goodwill/Others
+Carrying amount of equity-accounted investments
+1 Dividends are shown before withholding tax.
+2,622
+Carrying amount of equity-accounted investments
+-867
+Bertrandt
+779
+324
+35
+Dividends¹
+-3,416
+-1,957
+-353
+7,403
+Net assets at December 31
+3,202
+392
+Proportionate equity
+3,490
+1,601
+117
+Consolidation/Goodwill/Others
+8,724
+3,431
+4,802
+3,665
+120
+SUMMARIZED FINANCIAL INFORMATION ON INDIVIDUALLY IMMATERIAL JOINT VENTURES ON THE BASIS OF THE
+VOLKSWAGEN GROUP'S PROPORTIONATE INTEREST
+€ million
+Earnings after tax from continuing operations
+Earnings after tax from discontinued operations
+Other comprehensive income
+Total comprehensive income
+Carrying amount of equity-accounted investments
+2021
+2020
+218
+166
+124
+-186
+342
+1,165
+2,219
+-803
+-792
+1,743
+347
+24
+-9
+-149
+-33
+0
+548
+-3,416
+-497
+7,528
+3,936
+399
+3,011
+1,968
+120
+-2,567
+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, Germany.
+465
+Consolidated Financial Statements
+€ million
+SUMMARIZED FINANCIAL INFORMATION ON INDIVIDUALLY IMMATERIAL ASSOCIATES ON THE BASIS OF THE
+VOLKSWAGEN GROUP'S PROPORTIONATE INTEREST
+1 Dividends are shown before withholding tax.
+376
+361
+120
+608
+923
+-36
+-384
+-547
+361
+157
+992
+-3,274
+Earnings after tax from continuing operations
+Earnings after tax from discontinued operations
+Other comprehensive income
+Total comprehensive income
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+244
+There were unrecognized losses of €7 million (previous year: €7 million) relating to investments in associates.
+Furthermore, there were no contingent liabilities or financial guarantees relating to associates.
+1,663
+4,304
+-26
+1,214
+-170
+21
+-25
+-191
+2020
+2021
+The carrying amount includes shares in Gotion and Argo AI, among others.
+Carrying amount of equity-accounted investments
+0
+INTERESTS IN JOINT VENTURES
+541
+-15
+Consolidation/Goodwill/Others
+Proportionate equity
+Net assets at December 31
+Dividends¹
+Foreign exchange differences
+Changes in reserves
+Other comprehensive income
+Profit or loss
+Net assets at January 1
+2020
+324
+166
+832
+Carrying amount of equity-accounted investments
+14
+Carrying amount of equity-accounted investments
+3,758
+578
+1,597
+-16
+-146
+153
+-56
+7
+-599
+-124
+3,969
+212
+-1
+-1
+-292
+206
+-19
+538
+-3,339
+10
+-553
+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 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.
+Sales revenue
+392
+3,202
+8,724
+Net assets
+14
+2,078
+10
+of which financial liabilities²
+3,801
+11,793
+15,536
+Current liabilities
+35
+18
+46,841
+18,113
+20,791
+Depreciation and amortization
+1,352
+Income tax expense
+416
+1,122
+5,188
+Earnings before tax from continuing operations
+2
+12
+18
+Interest expenses
+5
+49
+Interest income
+22
+1,777
+1,648
+1
+FAW-Volkswagen Automotive Company
+of which financial liabilities²
+135
+Company¹
+SAIC-Volkswagen
+Automotive
+Automotive
+Company
+FAW-Volkswagen
+Equity interest in %
+2021
+€ million
+SUMMARIZED FINANCIAL INFORMATION ON THE MATERIAL JOINT VENTURES ON A 100% BASIS
+245
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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.
+SAIC-Volkswagen Sales 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 Automotive Company
+SAIC-Volkswagen
+Sales Company
+40
+50
+593
+1,312
+Noncurrent liabilities
+338
+2,444
+6,856
+of which cash and cash equivalents
+As of December 31, 2021, the quoted market price of the shares in Bertrandt amounted to €168 million
+(previous year: €116 million).
+3,355
+13,417
+Current assets
+973
+10,253
+12,154
+Noncurrent assets
+30
+5,335
+Consolidation/Goodwill/Others
+162
+152
+-17
+0
+-10
+Other comprehensive income
+Earnings after tax from discontinued operations
+-108
+-16
+1,057
+Earnings after tax from continuing operations
+846
+15,273
+Sales revenue
+1,090
+524
+5,539
+Total comprehensive income
+1,047
+-16
+-125
+666
+2,578
+17
+30
+29
+25
+Net assets
+0
+Current liabilities
+Current assets
+Noncurrent assets
+Equity interest in %
+2020
+Dividends received
+0
+75
+Noncurrent liabilities
+1,190
+Notes to the Consolidated Financial Statements
+There Holding
+Navistar³
+25
+29
+30
+3,852
+610
+1,175
+12,346
+476
+2
+161
+407
+87
+10,499
+324
+There Holding
+Bertrandt²
+Sinotruk¹
+Consolidated Financial Statements
+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. held around
+60% of the shares of HERE International B.V., Eindhoven (the Netherlands), as of the end of fiscal year 2021.
+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.
+In the previous year, a capital increase had been implemented at There Holding B.V., Rijswijk (the Netherlands).
+Moreover, the acquisition of shares in HERE International B.V., Eindhoven (the Netherlands), by additional
+investors had resulted in a capital decrease at the level of There Holding B.V. in the previous year. No capital
+transactions were carried out in fiscal year 2021.
+Volkswagen's ownership interest in There Holding B.V. continues to amount to 29.7%.
+Navistar
+On July 1, 2021, a TRATON GROUP company acquired all of the outstanding shares in Navistar International
+Corporation (Navistar), a US manufacturer of commercial vehicles. TRATON SE now indirectly holds 100% of the
+shares in Navistar International Corporation, which until then was accounted for using the equity method
+(interest of 16.7%). Trading in Navistar shares on the New York Stock Exchange has been discontinued (see “Key
+events" section for details). As of December 31, 2020, the quoted market price of the shares in Navistar amounted
+to €596 million.
+242
+Notes to the Consolidated Financial Statements
+241
+SUMMARIZED FINANCIAL INFORMATION ON MATERIAL ASSOCIATES ON A 100 % BASIS
+2021
+Equity interest in %
+Noncurrent assets
+Current assets
+155
+Current liabilities
+Net assets
+€ million
+1,765
+Noncurrent liabilities
+481
+1,214
+541
+3,969
+Net assets at January 1
+2021
+Navistar
+There Holding
+Bertrandt
+Sinotruk
+€ million
+RECONCILIATION OF THE FINANCIAL INFORMATION TO THE CARRYING AMOUNT OF THE EQUITY-ACCOUNTED INVESTMENTS
+243
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+4 Proportionate dividends are shown net of withholding tax.
+Profit or loss
+1,057
+-16
+-108
+8,755
+Proportionate equity
+1,090
+524
+5,539
+Net assets at December 31
+-1
+3 Balance sheet amounts of the previous year refer to the October 31 reporting date and income statement amounts of the previous year refer to the period from
+November 1 to October 31.
+-342
+168
+Foreign exchange differences
+Changes in reserves
+-17
+0
+-10
+Other comprehensive income
+Dividends¹
+2 Balance sheet amounts refer to the September 30 reporting date and income statement amounts refer to the period from October 1 to September 30.
+697
+5
+Earnings after tax from continuing operations
+Sales revenue
+-3,274
+1,214
+541
+3,969
+2,888
+9,072
+0
+7,180
+6,072
+408
+185
+3,921
+1 Balance sheet amounts refer to the June 30 reporting date and income statement amounts refer to the period from July 1 to June 30.
+24
+197
+915
+1,385
+538
+Dividends received4
+30
+6,664
+-80
+216
+537
+Total comprehensive income
+212
+10
+-20
+-1
+Other comprehensive income
+-19
+Earnings after tax from discontinued operations
+-292
+-1
+206
+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:
+> at which a financial asset or liability is measured at initial recognition;
+FINANCIAL ASSETS AND LIABILITIES AT AMORTIZED COST
+In the Volkswagen Group, the categories presented above are allocated to the "at amortized cost" and "at fair
+value" classes.
+> financial liabilities measured at amortized cost.
+> financial liabilities at fair value through profit or loss; and
+Financial liabilities are classified into the following categories:
+> financial assets at amortized cost.
+> minus any principal repayments;
+> financial assets at fair value through other comprehensive income (equity instruments); and
+> financial assets at fair value through other comprehensive income (debt instruments);
+> taking account of any loss allowances, write-downs for impairment and uncollectibility relating to financial
+assets; and
+> trade receivables and payables;
+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).
+To encourage lending to private households and companies affected by the Covid-19 pandemic, the ECB
+provided additional liquidity on favorable terms under the TLTRO III program. The Volkswagen Group is of the
+view that this support constitutes a government grant. The income from these government grants within the
+meaning of IAS 20 is recognized in the interest result.
+Consolidated Financial Statements
+Financial assets and liabilities measured at amortized cost are
+> receivables from financing business;
+> financial assets at fair value through profit or loss;
+> other receivables and financial assets and liabilities;
+> financial liabilities; and
+> cash, cash equivalents and time deposits.
+Notes to the Consolidated Financial Statements
+255
+FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE
+> 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.
+IFRS 9 classifies financial assets into the following categories:
+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.
+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.
+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.
+Changes in the carrying amount of financial assets measured at fair value are recognized either through OCI or
+through profit or loss.
+LEASES
+The Volkswagen Group accounts 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.
+If the Volkswagen Group is the lessee, it generally recognizes in its balance sheet a right-of-use asset and a
+lease liability for each lease. 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 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.
+Practical expedients are allowed 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 recognized in the income statement. Leases are accounted for being as of low value if the
+value of the leased asset when 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.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+LEASE ASSETS
+The accounting treatment 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 estimates are based on external
+data-if available - that reflects additional information that is available from within the company, 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.
+INVESTMENT PROPERTY
+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 is 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.
+CAPITALIZATION OF BORROWING COSTS
+EQUITY-ACCOUNTED INVESTMENTS
+The cost of equity-accounted investments is adjusted to reflect the share attributable to the Volkswagen Group
+of increases or reductions in equity at the associates and joint ventures after their acquisition, 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.
+254
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+FINANCIAL INSTRUMENTS
+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.
+253
+INVENTORIES
+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).
+DEFERRED TAXES
+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.
+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 method.
+NONCURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
+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.
+258
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+PENSION PROVISIONS
+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.
+PROVISIONS FOR INCOME TAXES
+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.
+SHARE-BASED PAYMENT
+Share-based payment in the Volkswagen Group comprises variable cash-settled payment plans. The obligations
+are therefore accounted for as cash-settled plans in accordance with IFRS 2. Obligations under these payment
+plans are measured at fair value using a recognized option pricing model, until maturity. The total compensation
+cost to be recognized corresponds to the actual payment and is allocated over the vesting period.
+OTHER PROVISIONS
+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 with economic benefits 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 -0.04% (previous year: -0.23%) 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.
+CONTINGENT LIABILITIES
+If the criteria for recognizing a provision are not met, but the outflow of resources with economic benefits 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 resources with economic benefits has become probable and their amount can be reliably estimated.
+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. The 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 intangible assets 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.
+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.
+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.
+Credit risks must be considered for all financial assets measured at amortized cost or fair value through other
+comprehensive income (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.
+257
+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 but instead reclassified to
+revenue reserves on disposal (no reclassification).
+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
+> 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.
+256
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+DERIVATIVES AND HEDGE ACCOUNTING
+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. Gains or losses from the measurement of hedging instruments and hedged items are recognized in profit
+or loss.
+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.
+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.
+RECEIVABLES FROM FINANCE LEASES
+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.
+IMPAIRMENT LOSSES ON FINANCIAL INSTRUMENTS
+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 general 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 period of more than 90 days, 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.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Insignificant receivables and significant individual receivables for which there is no indication of impairment
+are grouped into homogeneous portfolios on the basis of comparable credit risk features and allocated by risk
+class. Average historical default probabilities in combination with forward-looking parameters for the respective
+portfolio are then used to calculate the amount of the impairment loss.
+3 to 15 years
+10.14603
+20 to 50 years
+10 to 20 years
+121.77307
+129.86045
+126.51000
+130.32000
+JPY
+Japan
+84.57106
+87.46457
+89.69000
+84.16900
+INR
+India
+26.45443
+25.65394
+26.23900
+Mexico
+24.85900
+MXN
+24.41145
+Republic of Korea
+4.44376
+4.56535
+4.55615
+4.59425
+PLN
+Poland
+7.87025
+7.63330
+8.02895
+7.18700
+CNY
+People's Republic of China
+24.51746
+23.99548
+23.14175
+KRW
+CZK
+1.52944
+Australia
+Argentina
+2020
+2021
+2020
+2021
+INCOME STATEMENT
+AVERAGE RATE
+BALANCE SHEET MIDDLE RATE
+ON DECEMBER 31
+€1 =
+The rates applied are presented in the following table:
+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.
+Currency translation
+249
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ARS
+Czech Republic
+116.24508
+1.56120
+112.29685
+1.48331
+1.56275
+1.44170
+CAD
+Canada
+5.88850
+6.38119
+6.37555
+6.30680
+BRL
+Brazil
+1.65529
+1.57478
+1.58605
+80.73183
+103.28799
+1,344.96500
+1,336.21000
+1,353.93832
+6.2%
+2020
+2021
+Power Engineering segment
+Commercial Vehicles segment
+Passenger Cars segment
+WACC
+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:
+The 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.
+251
+Consolidated Financial Statements
+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 indefinite and finite useful lives.
+Normally, the respective brand is the cash-generating unit that is used as the testing level. Jointly used (corporate)
+assets are allocated to the cash-generating units using allocation formulas. Measurement of value in use is based
+on management's current medium-term planning (referred to as budget planning round). The planning period
+generally covers five years. 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,
+expected trends in the Volkswagen Group's market shares, the timing and cost of the development of vehicle
+models and the amount of investments in production facilities, as well as changes in price and cost structures,
+taking particular account of the transformation to e-mobility and an increase in regulatory requirements. The
+planning for the Financial Services segment is likewise prepared on the basis of these expectations, and also
+reflects the relevant market penetration rates of expected vehicle sales with finance or lease agreements and
+other services, as well as 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 is based on the assumption that global economic output will continue to grow in 2022, albeit at a
+somewhat lower level overall, after the recovery observed in the past fiscal year - provided that the Covid-19
+pandemic does not flare up again and that shortages of intermediates and commodities become less intense. We
+continue to believe that risks will arise from protectionist tendencies, turbulence in the financial markets and
+structural deficits in individual countries. In addition, growth prospects will be negatively impacted by ongoing
+geopolitical tensions and conflicts, with risks arising especially from the Russia-Ukraine conflict. We anticipate
+that both the advanced economies and the emerging markets will experience positive momentum. Furthermore,
+we anticipate that the global economy will also continue to grow in the period from 2023 to 2026. The
+Volkswagen Group's automotive market and volume planning reflects the above regional differentiation and
+takes account of the impact of the Covid-19 pandemic and of shortages of intermediates and commodities on
+the initial years of the planning period. The negative impact on earnings expected to arise from 2022 onward
+from more stringent emission and fuel consumption legislation and the sustained effects of the Covid-19
+pandemic is to be offset by corresponding programs to increase efficiency. In addition, the planning is based on
+the assumption that the supply situation for intermediates and commodities will improve from fiscal year 2023
+onward. The change in the operating return on sales assumed for fiscal year 2022 for the purpose of the impairment
+test is within the range forecast by Volkswagen.
+Amortization charges on intangible assets are 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.
+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 use (e.g. start of production)
+over the expected life cycle of the models, powertrains or software developed - generally between three and nine
+years.
+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
+and the other criteria for recognition as assets are met. If at least one of the criteria for recognition as assets is
+not met, the expenses are recognized in the income statement in the year in which they are incurred.
+6.8%
+In accordance with IAS 38, research costs are recognized as expenses when incurred.
+8.3%
+9.2%
+Useful life
+Consolidated Financial Statements
+Other equipment, operating and office equipment, including special tools
+Technical equipment and machinery
+Site improvements
+Buildings
+Depreciation is based mainly on the following useful lives:
+Notes to the Consolidated Financial Statements
+252
+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.
+PROPERTY, PLANT AND EQUIPMENT
+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.
+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 is taken into account. The
+composition of the peer groups used to determine beta factors and leverage is continuously reviewed and adjusted
+if necessary.
+The Passenger Cars segment includes the Porsche cash-generating unit, which is material to the
+Volkswagen Group.
+9.3%
+8.7%
+Purchased intangible assets are recognized at cost and – if they have finite useful lives – amortized over their
+useful lives using the straight-line method. This relates in particular to software, which is normally amortized
+over three years.
+INTANGIBLE ASSETS
+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.
+SEK
+Sweden
+18.76717
+17.48226
+18.01515
+18.05315
+ZAR
+South Africa
+82.63583
+87.22880
+91.77540
+84.97785
+RUB
+Russia
+1,345.14093
+10.25475
+10.02470
+10.48882
+United Kingdom
+MEASUREMENT PRINCIPLES
+Consolidated Financial Statements
+Accounting policies
+Notes to the Consolidated Financial Statements
+250
+1.14129
+1.18341
+6 to 12 years
+1.22760
+USD
+USA
+0.88904
+0.86000
+0.89925
+0.84000
+GBP
+1.13200
+AUD
+Notes to the Consolidated Financial Statements
+In the previous year, the contribution of AID to Argo AI at fair value resulted, after proportional profit
+elimination, in a non-cash gain of €0.8 billion, which was recognized in the other operating result.
+-471
+10,080
+786
+29
+8,129
+Equity-accounted investments
+-296
+-2
+-170
+-294
+-3
+Interest result and
+2,756
+2,756
+60
+-3
+85
+2,615
+equity-accounted investments
+other financial result
+-765
+10,080
+Investments in intangible assets,
+Group financing
+Unallocated activities
+Segment sales revenue
+2020
+2021
+€ million
+RECONCILIATION
+265
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+17,745
+405
+17,340
+208
+147
+1,309
+15,677
+and investment property
+property, plant and equipment,
+Share of the result of
+9,675
+-1,157
+10,832
+379
+2,309
+15,428
+Depreciation and amortization
+222,884
+222,884
+235
+-19,908
+-19,673
+222,649
+19,908
+242,557
+37,223
+3,555
+40,778
+3,640
+22,156
+175,984
+Total sales revenue
+2
+1,042
+15,310
+Intersegment sales revenue
+3,638
+21,114
+8,647
+270,099
+1,290
+27
+Impairment losses
+179
+3,012
+-482
+-79
+8,381
+Segment result (operating result)
+229
+-8
+237
+204
+1
+32
+Reversal of impairment losses
+1,306
+-49
+25,749
+-1,014
+26,763
+1,355
+742
+64
+370
+242,557
+997
+27
+Consolidation/Holding company function
+-21,216
+Total
+revenue
+Hedges sales
+Asia-
+Pacific
+South
+America
+North
+America
+Europe/Other
+markets¹
+Germany
+€ million
+BY REGION 2020
+1 Excluding Germany.
+201,697
+4,054
+2,519
+34,274
+47,697
+113,153
+investment property
+Intangible assets, property, plant
+and equipment, lease assets and
+Sales revenue from
+250,200
+external customers
+90,652
+Notes to the Consolidated Financial Statements
+266
+uniformly according to the economic ownership.
+The allocation of interregional intragroup transactions regarding the segment assets has been presented
+Allocation of sales revenue to the regions follows the destination principle.
+1 Excluding Germany.
+183,096
+3,611
+2,323
+23,852
+47,680
+105,630
+investment property
+Intangible assets, property, plant
+and equipment, lease assets and
+222,884
+-345
+44,288
+8,632
+36,810
+42,847
+160,674
+-386
+11,039
+-8
+-18
+-28
+-36
+10,832
+20,838
+€ million
+BY REGION 2021
+Consolidated result before tax
+Financial result
+Operating result
+Consolidation/Holding company function
+Group financing
+Unallocated activities
+Segment result (operating result)
+222,884
+250,200
+Group sales revenue
+-20,698
+-1,509
+48,672
+-1,121
+9,675
+45,305
+101,118
+44,452
+external customers
+Sales revenue from
+Total
+revenue
+Hedges sales
+Asia-
+Pacific
+South
+America
+America
+markets¹
+Germany
+North
+Europe/Other
+11,667
+20,126
+1,991
+851
+19,275
+1. Sales revenue
+external customers
+Volkswagen
+Group
+Notes to the Consolidated Financial Statements
+264
+As a matter of principle, business relationships between the companies within the segments of the
+Volkswagen Group are transacted at arm's length prices.
+Investments in intangible assets, property, plant and equipment, and investment property are reported net
+of investments in right-of-use assets from leases.
+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.
+In segment reporting, the share of the result of joint ventures is contained in the result of equity-accounted
+investments in the corresponding segments.
+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.
+The activities of the Financial Services segment comprise dealership and customer financing, leasing, banking
+and insurance activities, fleet management and mobility services. In this segment, activities are combined for
+reporting purposes taking into particular account the comparability of the type of services and of the regulatory
+environment.
+Consolidated Financial Statements
+The Power Engineering segment combines the large-bore diesel engines, turbomachinery, and propulsion
+components businesses. Until October 2020, it also included the business of Renk.
+The activities of the Passenger Cars and Light Commercial Vehicles segment cover the development of
+vehicles, engines and vehicle software, 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 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.
+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.
+Segment reporting
+263
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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.
+The Volkswagen Group's planning is based on the assumption that global economic output will continue to
+grow in 2022, albeit at a somewhat lower level overall, after the recovery observed in the past fiscal year – provided
+that the Covid-19 pandemic does not flare up again and that shortages of intermediates and commodities become
+less intense.
+The Commercial Vehicles segment primarily comprises the development, production and sale of trucks and
+buses, the corresponding genuine parts business and related services. As in the case of the passenger car brands,
+there is collaboration within the areas procurement, development and sales. The aim is to create closer cooperation
+within the business areas. As from the second half of 2021, this segment also includes Navistar.
+REPORTING SEGMENTS 2021
+€ million
+Passenger Cars
+Intersegment sales revenue
+250,200
+379
+249,821
+41,006
+3,277
+29,046
+176,492
+external customers
+Sales revenue from
+Volkswagen
+Group
+Reconciliation
+Total
+segments
+Financial
+Services
+Power
+Vehicles Engineering
+Vehicles
+Commercial
+Commercial
+and Light
+The global economy recovered in 2021 due to the temporary relaxation of many restrictions and recorded
+positive growth of 5.6% (previous year: decrease of 3.4%).
+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.
+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. 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.
+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.
+Sales revenue is generally 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.
+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 ratably
+as income 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.
+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 related sales revenue is deferred and recognized over the term of
+the warranty.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+260
+If a contract comprises several separately identifiable components (multiple-element arrangements), these
+components are recognized separately in accordance with the principles outlined above.
+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.
+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.
+Sales revenue, interest and commission income from financial services and other operating income are recognized
+only when the relevant services have been rendered or the goods have been delivered, i.e. when the customer
+has obtained control of the goods or services. 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, customer bonuses, or rebates). 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.
+REVENUE AND EXPENSE RECOGNITION
+Current liabilities are recognized at their repayment or settlement value.
+Lease liabilities are carried at the present value of the lease payments.
+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.
+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
+259
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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.
+16,274
+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.
+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.
+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.
+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 conditions for awarding the grants and that the grants will in fact be awarded.
+This assessment is based on the nature of the legal entitlement and past experience.
+If actual developments differ from the assumptions made for recognizing the provisions, the figures actually
+recorded may differ compared to the estimates expected originally.
+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.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+262
+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.
+Tax provisions were recognized for potential future retrospective tax payments, while other provisions were
+recognized for ancillary tax payments arising in this connection. Based on the decision of the Federal Constitutional
+Court, interest anticipated on retrospective tax payments in Germany has been calculated using an interest rate
+of 6% (until 2018) and an expected interest rate of 3% (from 2019 onward).
+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.
+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 sections entitled "IFRS 7 (Financial Instruments)" and
+"Financial risk management and financial instruments" contain 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. Actuarial gains or losses arising from changes in
+measurement inputs 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 invariably means that unused provisions are reversed or additional amounts have to be recognized for
+provisions. 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.
+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.
+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. More
+detailed information on impairment tests and the measurement parameters used for those tests can be found in
+the explanations above regarding intangible assets.
+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:
+ESTIMATES AND ASSUMPTIONS BY MANAGEMENT
+261
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Government grants related to income, i.e. that compensate the Group for expenses incurred, are always recognized
+in profit or loss for the period and allocated to 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.
+GOVERNMENT GRANTS
+1,046
+1
+2,957
+12,531
+814
+37
+1,035
+10,645
+Equity-accounted investments
+-1,470
+-4,974
+3,504
+-154
+-4
+-142
+3,804
+other financial result
+Interest result and
+2,321
+2,321
+89
+99
+12,531
+-9
+Investments in intangible assets,
+and investment property
+segments Reconciliation
+Total
+Financial
+Services
+Power
+Engineering
+Vehicles
+Commercial
+Vehicles
+Commercial
+and Light
+Passenger Cars
+€ million
+REPORTING SEGMENTS 2020
+18,498
+346
+18,152
+159
+68
+1,596
+16,329
+property, plant and equipment,
+Sales revenue from
+433
+equity-accounted investments
+140
+Impairment losses
+27,282
+-588
+27,870
+9,159
+245
+2,617
+15,848
+Depreciation and amortization
+250,200
+-19,899
+-20,278
+20,278
+270,099
+43,963
+3,278
+30,092
+192,767
+Total sales revenue
+164
+1,808
+13
+856
+Share of the result of
+19,275
+-1,563
+20,838
+6,045
+45
+134
+14,614
+Segment result (operating result)
+736
+-54
+790
+614
+1
+50
+125
+Reversal of impairment losses
+857
+1
+539
+Income statement disclosures
+1,135
+€ million
+242,557
+-19,673
+222,884
+1 Beginning in fiscal year 2021, all sales of used vehicles that were presented in the vehicles, leasing business and other sales revenue line items in the previous year
+were allocated to the used vehicles and third-party products line item. Previously, for example, the transfer of a leased vehicle from the lessee had been reported
+in the leasing business line item. Prior-year figures were adjusted accordingly.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+267
+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 €6,877 million (previous year:
+€6,815 million) was included in contract liabilities as of January 1, 2021.
+€575 million (previous year: €345 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 €3,260 million (previous year: €3,676 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, 2022, the vast majority of the Volkswagen Group's performance obligations that
+were 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 2022. The calculation of the
+amounts for the Power Engineering Business Area took account of both contracts with a term of up to one year
+and service contracts under which the Volkswagen Group realizes sales revenue in exactly the same amount as
+the customer benefits from the services rendered 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 €1,984 million (previous year: €2,303 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
+€805 million (previous year: €1,180 million). The impairment losses totaling €344 million (previous year:
+€356 million) recognized during the reporting period on intangible assets and items of property, plant and
+equipment result primarily from lower values in use of various products in the Passenger Cars segment, due to
+market and exchange rate risks, and in particular from expected declines in volumes. The impairment losses on
+lease assets in the amount of €461 million (previous year: €824 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. €27 million (previous year: €60 million) of this figure is reported
+in current lease assets.
+40,778
+Government grants related to income amounted to €985 million in the fiscal year (previous year: €1,001 million)
+and were generally allocated to the functional areas.
+Distribution expenses amounting to €19.2 billion (previous year: €18.4 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 €10.4 billion (previous year: €9.4 billion) mainly include nonstaff overheads and
+personnel costs, as well as depreciation and amortization charges applicable to the administrative function.
+268
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+5. Other operating income
+€ million
+2021
+2020
+Income from reversal of loss allowances on receivables and other assets
+1,754
+1,334
+3. Distribution expenses
+3,640
+11,433
+-514
+Leasing business¹
+767
+1,628
+0
+14,668
+17,063
+-1,768
+15,295
+Interest and similar
+income
+192
+8
+7,707
+7,907
+-261
+7,646
+Hedges sales revenue
+-357
+-18
+0
+-375
+30
+-345
+Other sales revenue¹
+9,533
+175,984
+1,709
+22,156
+704
+11,946
+Income from reversal of provisions and accruals
+1,236
+1,086
+Income from foreign currency hedging derivatives within hedge accounting
+1,632
+2,302
+Losses from foreign currency hedging derivatives within hedge accounting
+1,273
+1,034
+Expenses from other hedges
+1,091
+1,806
+Foreign exchange losses
+1,909
+3,123
+Expenses from cost allocations
+653
+743
+Expenses for termination agreements
+333
+391
+Losses on disposal of noncurrent assets
+253
+212
+Miscellaneous other operating expenses
+5,611
+3,979
+13,049
+13,904
+Allowances on other receivables and other assets include allowances on receivables from long-term construction
+contracts amounting to €1.2 million (previous year: €1.2 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, among other items, of expenses in connection with the
+diesel issue (see the “Key events” section for more information).
+STRUCTURE OF GROUP SALES REVENUE 2021
+Loss allowances on other receivables and other assets
+567
+316
+Loss allowances on trade receivables
+910
+1,185
+Income from other hedges
+3,547
+1,709
+Income from foreign exchange gains
+2,610
+2,588
+Income from sale of promotional material
+398
+312
+Income from cost allocations
+1,040
+1,039
+Income from investment property
+10
+10
+Gains on asset disposals and the reversal of impairment losses on noncurrent assets
+Miscellaneous other operating income
+299
+2,455
+2,876
+14,731
+12,438
+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
+2021
+2020
+294
+567
+771
+Motorcycles
+and parts deliveries
+12,188
+723
+12,911
+-58
+12,853
+Power Engineering
+3,278
+3,278
+-1
+3,276
+Motorcycles
+732
+Engines, powertrains
+732
+Leasing business
+785
+1,686
+0
+15,171
+17,642
+-1,167
+16,474
+Interest and similar
+income
+209
+5
+7,856
+732
+30,864
+-3,201
+34,065
+Passenger Cars
+567
+and Light
+Commercial
+Vehicles
+Consolidated Financial Statements
+Commercial
+Power
+Vehicles
+Engineering
+Financial
+Services
+Total Segments
+Reconciliation
+Volkswagen
+Group
+Vehicles
+143,473
+19,029
+Genuine parts
+13,353
+4,800
+162,502
+18,153
+-14,435
+148,067
+-138
+Used vehicles and
+third-party products
+12,018
+1,887
+20,160
+8,070
+-349
+18,015
+Hedges sales revenue
+129,481
+13,385
+Genuine parts
+11,755
+3,249
+142,866
+15,004
+-13,703
+-118
+129,164
+14,886
+Used vehicles and
+third-party products¹
+11,421
+1,525
+17,699
+30,645
+27,348
+Engines, powertrains
+and parts deliveries
+12,625
+669
+13,294
+-41
+13,253
+Power Engineering
+3,640
+3,640
+7,721
+-2
+3,638
+Vehicles¹
+Volkswagen
+Group
+-3,297
+Total Segments
+-42
+0
+Reconciliation
+-407
+22
+-386
+Other sales revenue
+10,375
+2,004
+13,154
+-571
+12,583
+192,767
+30,092
+3,278
+775
+270,099
+Financial
+Services
+-19,899
+250,200
+STRUCTURE OF GROUP SALES REVENUE 2020
+43,963
+Passenger Cars
+Commercial
+Vehicles
+and Light
+Commercial
+€ million
+Vehicles
+-365
+Power
+Engineering
+Carrying amount at Dec. 31, 2021
+132,486
+4
+40,103
+21,083
+71,296
+27,199
+63,695
+16,814
+7,641
+-499
+5,156
+-203
+Balance at Dec. 31, 2021
+Loss allowances on deferred tax assets from
+temporary differences
+12,041
+26
+97
+7
+-21
+1
+56
+5,298
+-31
+211
+5
+Classified as held for sale
+38
+138
+273
+Disposals
+382
+1,231
+2,288
+2
+3,903
+Reversal of impairment losses
+13
+4
+2
+13,284
+5,216
+Liabilities and other provisions
+17
+135
+8,150
+8,729
+5,599
+10,811
+12,477
+655
+301
+1,113
+Noncurrent financial assets
+Property, plant and equipment, and lease assets
+Intangible assets
+Dec. 31, 2020
+DEFERRED TAX LIABILITIES
+Transfers
+Dec. 31, 2021
+Dec. 31, 2020
+Inventories
+14,269
+97
+2,317
+27
+29
+10,285
+9,350
+Pension provisions
+242
+24
+4,480
+2,106
+4,455
+10,236
+9,516
+1,858
+1,775
+(including Financial Services Division)
+Receivables and other assets
+893
+801
+Other current assets
+5
+271
+85
+Changes in consolidated Group
+80
+8
+212
+2,783
+571
+Additions
+1,874
+1,159
+3,454
+4,246
+10,733
+Transfers
+1,144
+1,745
+1,694
+-4,623
+-39
+187,129
+7,766
+128
+84,389
+1,124
+857
+6.1
+DEFERRED TAX ASSETS
+Dec. 31, 2021
+13. Property, plant and equipment
+CHANGES IN PROPERTY, PLANT AND EQUIPMENT IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2021
+€ million
+Land, land rights
+and buildings,
+including
+buildings on
+third-party land
+Technical
+equipment and
+machinery
+Classified as held for sale
+Other
+equipment,
+operating and
+office equipment
+construction
+Total
+Cost
+Balance at Jan. 1, 2021
+45,151
+49,822
+Foreign exchange differences
+674
+Payments on
+account and
+assets under
+78
+226
+139
+252
+634
+912
+4
+1,802
+Changes in consolidated Group
+-200
+-129
+Foreign exchange differences
+-116
+-447
+Additions to cumulative amortization
+2,164
+3,242
+6,464
+11,870
+Additions to cumulative impairment losses
+102
+-1
+19
+123,245
+66,408
+26
+469
+Disposals
+756
+1,293
+2,420
+58
+4,527
+30
+Balance at Dec. 31, 2021
+52,144
+88,111
+7,645
+196,181
+Amortization and impairment
+Balance at Jan. 1, 2021
+19,142
+37,665
+48,281
+€ million
+Notes to the Consolidated Financial Statements
+DEFERRED TAXES CLASSIFIED BY BALANCE SHEET ITEM
+-1,449
+-1,499
+Expenses from valuation of interest derivatives
+-27
+-23
+Interest expenses included in lease payments
+-168
+-206
+Interest result from discounting other noncurrent liabilities
+180
+-104
+Net interest on the net defined benefit liability
+Interest result
+-354
+-459
+-1,007
+-1,498
+270
+-2,291
+-1,818
+5
+0
+403
+236
+269
+113
+134
+2,321
+2,756
+2021
+Consolidated Financial Statements
+2020
+Other interest and similar income
+Income from valuation of interest derivatives
+Interest expenses
+Other interest and similar expenses
+810
+793
+810
+788
+Interest income
+9. Other financial result
+€ million
+2021
+-61
+Gains and losses from fair value changes of hedging instruments/derivatives
+not included in hedge accounting
+-648
+1,950
+Gains and losses from fair value changes of hedging instruments/derivatives
+included in hedge accounting
+Other financial result
+36
+20
+94
+-463
+Gains and losses from fair value changes of hedging instruments/derivatives not included in hedge accounting
+include primarily losses on the measurement and realization of forward purchase agreements for new shares in
+QuantumScape Corporation in an amount of €0.6 billion (previous year: gains of €1.4 billion).
+10. Income tax income/expense
+COMPONENTS OF TAX INCOME AND EXPENSE
+€ million
+Current tax expense, Germany
+Current tax expense, abroad
+Temporary differences, net of loss allowances
+12,056
+733
+349
+-1,620
+1,097
+2020
+Income from profit and loss transfer agreements
+Cost of loss absorption
+Other income from equity investments
+Other expenses from equity investments
+Income from marketable securities and loans
+43
+23
+-928
+-81
+315
+91
+-210
+-433
+164
+-230
+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
+753
+-103
+243
+306
+2,916
+4,374
+15,024
+16,934
+Dec. 31, 2020
+Dec. 31, 2021
+Dec. 31, 2020
+TAX LOSS
+CARRYFORWARDS
+THEREOF UNUSABLE
+4,584
+Dec. 31, 2021
+PREVIOUSLY UNUSED
+Expiry over 10 years
+Total
+Expiry within 10 years
+Non-expiring tax loss carryforwards
+€ million
+The tax loss carryforwards and the expiry of loss carryforwards that could not be used changed as follows:
+271
+Notes to the Consolidated Financial Statements
+TAX LOSS
+CARRYFORWARDS
+Consolidated Financial Statements
+2,747
+1,595
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+272
+In fiscal year 2021, tax effects of €5 million resulting from equity transaction costs were debited to equity
+(previous year: credit of €5 million).
+€7,281 million (previous year: €7,997 million) of the deferred taxes recognized in the balance sheet was credited
+to equity and relates to other comprehensive income. €27 million (previous year: €53 million) of this figure is
+attributable to noncontrolling interests. In fiscal year 2021, deferred tax income of €10 million (previous year:
+€73 million) from the remeasurement of pension plans directly through equity was reclassified within equity.
+In the fiscal year under review, there were effects from capital transactions with noncontrolling interests.
+The classification of changes in deferred taxes is presented in the statement of comprehensive income.
+Deferred tax assets of €12,044 million (previous year: €12,591 million) were recognized without being offset
+by deferred tax liabilities in the same amount. In fiscal year 2021, the deferred tax assets of companies within
+the German tax group recognized due to positive results in the past 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.
+In accordance with IAS 12.39, deferred tax liabilities of €200 million (previous year: €166 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 €42 million at Group level (previous
+year: €54 million).
+No deferred tax assets were recognized for deductible temporary differences of €2,157 million (previous year:
+€899 million) and for tax credits of €208 million (previous year: €105 million) that would expire in the next 20
+years. The increase in unrecognized deferred tax assets for deductible temporary differences is due to a change
+in tax laws in Italy.
+3,215
+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 €32 million (previous year: €55 million). Deferred tax
+expense was reduced by €305 million (previous year: €134 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 €24 million (previous year: €470 million). Deferred tax income resulting from
+the reversal of a write-down of deferred tax assets amounts to €381 million (previous year: €36 million).
+Tax credits granted by various countries amounted to €578 million (previous year: €376 million).
+13,026
+23,088
+31,441
+2,175
+7,057
+4,849
+11,760
+2,180
+8,939
+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:
+The realization of tax benefits from tax loss carryforwards from previous years resulted in a reduction in
+current income taxes in 2021 of €700 million (previous year: €392 million).
+A tax rate of 30.0% (previous year: 30.0%) was used to measure deferred taxes in the German consolidated
+tax group.
+Consolidated Financial Statements
+7. Share of the result of equity-accounted investments
+€ million
+Share of profits of equity-accounted investments
+of which from joint ventures
+of which from associates
+Share of losses of equity-accounted investments
+of which from joint ventures
+Current income tax expense
+of which from associates
+€ million
+Notes to the Consolidated Financial Statements
+269
+2021
+2020
+2,669
+3,159
+2,364
+8. Interest result
+The local income tax rates applied to companies outside Germany vary between 0% and 50% (previous year:
+0% and 45%). In the case of split tax rates, the tax rate applicable to undistributed profits is applied.
+of which prior-period income (-)/expense (+)
+Deferred tax income (-)/expense (+), Germany
+Deferred tax income (-)/expense (+), abroad
+Deferred tax income (-)/expense (+)
+2021
+The statutory corporation tax rate in Germany for the 2021 assessment period was 15%. Including trade tax and
+the solidarity surcharge, this resulted in an aggregate tax rate of 30.0% (previous year: 30.0%).
+2,843
+4,698
+-307
+86
+719
+-986
+-1,026
+Income tax income/expense
+1,072
+310
+3,150
+4,612
+2,210
+3,382
+940
+1,230
+2020
+299
+12,790
+38,215
+31,172
+Other
+intangible assets
+Total
+16,911
+14
+23,318
+82
+6,438
+35
+41,316
+312
+10,334
+194
+98,317
+636
+Capitalized
+development
+costs for products
+currently in use
+Changes in
+736
+2,835
+215
+235
+2,380
+6,402
+Additions
+6,513
+1,323
+1,223
+9,059
+consolidated Group
+Capitalized
+development costs
+for products under
+development
+Goodwill
+Brand names
+€ million
+14,843
+8,334
+€ million
+8,730
+4,898
+€ million
+6,113
+3,435
+€
+29.59
+16.60
+€
+29.65
+16.66
+Consolidated Financial Statements
+12. Intangible assets
+Balance sheet disclosures
+Notes to the Consolidated Financial Statements
+275
+CHANGES IN INTANGIBLE ASSETS IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2021
+€ million
+Cost
+Balance at Jan. 1, 2021
+Foreign exchange differences
+Transfers
+533
+-2,904
+35
+278
+For all cash-generating units, 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.
+For the Commercial Vehicles reporting segment, the planning reflects an expansion of e-mobility in all segments.
+At MAN Truck & Bus, the plan reflects positive effects in the planning period from the realignment program initiated
+in 2021. Moreover, Navistar is to be taken to new levels of strength. The measures applied to this end range from
+using the powerful component and technology organization within the TRATON GROUP through expanding the
+financial services business down to making even more effective use of the largest dealer and service network in
+the North American market that Navistar has already established.
+The planning of the Porsche cash-generating unit is based on the future product strategy and other core elements
+of the 2030 strategy, which covers in particular increasing electrification of the model range, faster decarboniza-
+tion and expanded digitalization.
+Moreover, the following aspects were of significance for the brands with material recognized brand names and
+goodwill:
+The impairment test for recognized goodwill and brand names is based on value in use, which has been determined
+at the level of the respective brand. In this process, the WACC rates, based on the risk-free rate of interest, a market
+risk premium and the cost of debt, are applied. For more information on the general approach and key assumptions,
+please refer to the details provided on intangible assets in the “Accounting policies” section.
+23,318
+26,174
+260
+252
+130
+Notes to the Consolidated Financial Statements
+127
+163
+290
+290
+Porsche Holding Salzburg
+Other
+ŠKODA
+Ducati
+2,917
+263
+264
+587
+587
+155
+Research and development costs developed as follows:
+€ million
+Consolidated Financial Statements
+35
+Classified as held for sale
+22
+1
+146
+18
+Research and development costs recognized in profit or loss
+8.8
+4,644
+5,050
+46.6
+50.3
+21.2
+6,473
+7,843
+12.2
+13,885
+15,583
+Amortization of capitalized development costs
+Capitalization ratio in %
+of which: capitalized development costs
+Total research and development costs
+%
+2020
+2021
+2,904
+539
+€ million
+-43
+13,486
+5,131
+4,890
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+273
+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 2021 of €4,698 million (previous year: €2,843 million) was €1,340 million lower
+(previous year: €657 million) than the expected tax expense of €6,038 million that would have resulted from
+application of a tax rate for the Group of 30.0% (previous year: 30.0%) to the earnings before tax of the Group.
+RECONCILIATION OF EXPECTED TO EFFECTIVE INCOME TAX
+€ million
+Profit before tax
+13,393
+Expected income tax income (-)/expense (+)
+Reconciliation:
+Effect of different tax rates outside Germany
+Proportion of taxation relating to:
+tax-exempt income
+expenses not deductible for tax purposes
+effects of loss carryforwards
+permanent differences
+Tax credits
+Prior-period tax expense
+Effect of tax rate changes
+Nondeductible withholding tax
+(tax rate 30.0%; previous year: 30.0%)
+Amount recognized
+451
+605
+37,175
+35,611
+Tax loss carryforwards, net of loss allowances
+4,783
+3,465
+Tax credits, net of loss allowances
+374
+271
+Value before consolidation and offset
+43,372
+41,733
+37,175
+35,611
+of which attributable to noncurrent assets and liabilities
+29,284
+27,924
+29,556
+28,085
+Offset
+32,649
+32,649
+31,172
+Consolidation
+2,670
+2,925
+Other taxation changes
+Effective income tax expense
+Effective tax rate in %
+2021
+274
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+11. 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 2021 and 2020 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, preferred shares are
+entitled to a €0.06 higher dividend than ordinary shares.
+Weighted average number of:
+Ordinary shares - basic/diluted
+Preferred shares - basic/diluted
+Earnings after tax
+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
+2021
+2020
+Shares
+Shares
+295,089,818
+206,205,445
+295,089,818
+206,205,445
+€ million
+15,428
+8,824
+€ million
+46
+24.4
+Navistar
+23.3
+4,698
+2020
+20,126
+11,667
+6,038
+3,500
+-1,002
+-364
+-1,078
+-1,501
+1,041
+540
+-221
+520
+-326
+65
+-133
+-117
+262
+-211
+42
+54
+285
+419
+-210
+-62
+2,843
+MAN Energy Solutions
+MAN Truck & Bus
+2,808
+Balance at Jan. 1, 2020
+Cost
+€ million
+CHANGES IN INTANGIBLE ASSETS IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2020
+Notes to the Consolidated Financial Statements
+276
+77,689
+5,058
+18,685
+10,199
+26,174
+Foreign exchange differences
+17,572
+Carrying amount at
+35,056
+8,731
+26,120
+88
+29
+89
+Balance at Dec. 31, 2021
+0
+0
+Reversal of impairment losses
+Dec. 31, 2021
+Changes in
+Consolidated Financial Statements
+Brand names
+1,897
+4,576
+Additions
+111
+56
+15
+8
+31
+consolidated Group
+93,098
+-548
+9,889
+-281
+-299
+-77
+77
+33
+36,895
+6,188
+23,247
+16,878
+Total
+intangible assets
+Other
+Capitalized
+development
+costs for products
+currently in use
+Capitalized
+development costs
+for products under
+development
+Goodwill
+1,289
+204
+1,068
+7
+53
+185
+0
+0
+0
+Foreign exchange differences
+30,349
+8,046
+22,133
+87
+83
+Balance at Jan. 1, 2021
+Amortization and impairment
+112,745
+13,789
+44,806
+10,287
+26,203
+17,661
+Balance at Dec. 31, 2021
+1,517
+358
+1,138
+10
+11
+238
+1,038
+Changes in
+-63
+11
+Disposals
+127
+16
+110
+Classified as held for sale
+-1
+-2
+0
+Transfers
+133
+25
+56
+80
+39
+impairment losses
+Additions to cumulative
+5,829
+842
+4,987
+0
+amortization
+Additions to cumulative
+-77
+-14
+consolidated Group
+37,997
+7,511
+-4,150
+2020
+2021
+€ million
+The allocation of the brand names and goodwill to the operating segments is shown in the following table:
+277
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Other intangible assets comprise in particular concessions, purchased customer lists and dealer relationships,
+industrial and similar rights, and licenses in such rights and assets.
+67,968
+2,288
+19,183
+Brand names by operating segment
+6,351
+16,828
+30,349
+8,046
+22,133
+87
+7
+0
+7
+1,606
+226
+1,344
+23,318
+Porsche
+Scania Vehicles and Services
+MAN Truck & Bus
+2,749
+Scania Vehicles and Services
+18,825
+18,825
+Porsche
+Goodwill by operating segment
+16,828
+17,572
+89
+84
+Other
+404
+404
+771
+Ducati
+Navistar
+415
+415
+MAN Energy Solutions
+1,127
+1,127
+971
+949
+13,823
+13,823
+37
+1
+0
+7
+-5
+Foreign exchange differences
+26,884
+7,700
+19,053
+45
+86
+Balance at Jan. 1, 2020
+Amortization and impairment
+98,317
+10,334
+41,316
+6,438
+23,318
+16,911
+Balance at Dec. 31, 2020
+1,795
+310
+1,341
+107
+37
+Disposals
+-58
+-58
+4,150
+0
+Transfers
+-172
+-409
+-6
+229
+62
+75
+55
+37
+Dec. 31, 2020
+Carrying amount at
+83
+Balance at Dec. 31, 2020
+Reversal of impairment losses
+Disposals
+Transfers
+impairment losses
+Additions to cumulative
+5,249
+733
+4,514
+3
+amortization
+Additions to cumulative
+9
+9
+consolidated Group
+Changes in
+-232
+Disposals
+188
+1,086
+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
+Assets related to derivatives not included in hedging relationships
+Total
+Dec. 31, 2021
+Dec. 31, 2020
+0
+44
+66
+14
+380
+819
+82
+11
+1,391
+2,247
+1,920
+3,134
+3,399
+2,917
+5,319
+6,051
+Further details on derivative financial instruments as a whole are given in the section entitled “Financial risk
+management and financial instruments".
+286
+Notes to the Consolidated Financial Statements
+foreign currency risk from liabilities using fair value hedges
+foreign currency risk from assets using fair value hedges
+Transactions for hedging
+€ million
+5,319
+2,616
+3,435
+6,051
+Receivables from loans,
+bonds, profit participation rights
+(excluding interest)
+6,174
+4,539
+10,713
+6,421
+3,568
+9,988
+18. Noncurrent and current other receivables
+Miscellaneous financial assets
+5,709
+4,197
+832
+5,029
+12,584
+9,156
+21,741
+13,234
+7,834
+21,068
+Other financial assets include receivables from related parties of €10.1 billion (previous year: €9.7 billion). Other
+financial assets amounting to €161 million (previous year: €124 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, miscellaneous financial assets include receivables from restricted deposits that serve as collateral
+(mainly under asset-backed securities transactions).
+The positive fair values of derivatives relate to the following items:
+4,623
+3,532
+€ million
+CARRYING AMOUNT
+Additions and disposals
+Change in valuation allowances
+Foreign exchange differences
+Contingent construction contract receivables at Dec. 31
+2021
+2020
+389
+314
+-90
+64
+5
+10
+2
+0
+306
+389
+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,
+2021, costs to obtain contracts amounting to €76 million (previous year: €63 million) were recognized as assets.
+In 2021, amortization charges on capitalized costs to obtain contracts amounted to €38 million (previous year:
+€23 million). No impairment losses were recognized on capitalized costs to obtain contracts in 2021 and 2020.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+287
+19. Tax assets
+€ million
+CARRYING AMOUNT
+CARRYING AMOUNT
+Current
+Noncurrent
+Dec. 31, 2021
+Contingent construction contract receivables at Jan. 1
+€ million
+Other receivables include contingent receivables from long-term construction contracts recognized in accordance
+with project progress. They correspond to the contract assets recognized under contracts with customers and
+changed as follows:
+Current other receivables are predominantly non-interest-bearing.
+CARRYING AMOUNT
+Current
+Noncurrent
+Dec. 31, 2021
+Current
+Noncurrent
+Dec. 31, 2020
+Other recoverable income
+taxes
+4,381
+964
+5,345
+4,063
+1,058
+Consolidated Financial Statements
+5,121
+3,092
+1,931
+5,023
+3,318
+1,810
+5,128
+7,473
+2,895
+10,368
+7,381
+2,867
+10,248
+Miscellaneous receivables include assets to fund post-employment benefits in the amount of €175 million
+(previous year: €41 million). This item also includes the share of the technical provisions attributable to reinsurers
+amounting to €57 million (previous year: €46 million).
+Miscellaneous receivables
+Current
+1,787
+of derivative financial
+Of the other changes recognized in other comprehensive income, €481 million (previous year: €- 239 million)
+is attributable to joint ventures and €127 million (previous year: €- 41 million) to associates. They are mainly the
+result of foreign exchange differences in the amount of €521 million (previous year: €− 319 million), pension
+plan remeasurements in the amount of €17 million (previous year: €103 million) and fair value measurement of
+cash flow hedges in the amount of €- 16 million (previous year: €16 million).
+284
+Notes to the Consolidated Financial Statements
+16. Noncurrent and current financial services receivables
+€ million
+Receivables from
+CARRYING AMOUNT
+Current
+Noncurrent
+CARRYING AMOUNT
+FAIR
+VALUE
+Dec. 31, 2021
+Dec. 31, 2021
+Current
+Noncurrent
+Consolidated Financial Statements
+FAIR
+VALUE
+Dec. 31, 2020
+Dec. 31, 2020
+financing business
+Customer financing
+27,272
+48,639
+75,911
+77,103
+26,758
+46,157
+In the previous year, the main changes in the consolidated Group affecting equity-accounted investments in
+an amount of €- 0.8 billion related to the reclassification of shares in Volkswagen (Anhui) Automotive Company
+following its first-time consolidation.
+In the previous year, additions to equity-accounted investments included an amount of €1.7 billion related
+to the acquisition of shares in Argo AI, a total of €1.0 billion related to the acquisition of additional shares in
+Volkswagen (Anhui) Automotive Company (formerly: JAC Volkswagen Automotive Company) and shares in Anhui
+Jianghuai Automobile Group Holdings, and an amount of €0.5 billion related to the capital increase at QuantumScape
+Corporation and the realization of a forward purchase transaction in this context.
+The changes in the consolidated Group affecting equity-accounted investments in the fiscal year relate mainly
+to the reclassification of shares in Navistar in an amount of €- 0.6 billion following its first-time consolidation. The
+gain of €0.2 billion on remeasuring shares already held resulting from ending the use of the equity method was
+reported under additions. Additional disclosures on Navistar can be found in the “Key events" section.
+Additions to equity-accounted investments in the fiscal year relate primarily to the acquisition of additional
+shares in Gotion High-Tech Company in an amount of €1.1 billion, the acquisition of additional shares in
+Northvolt AB in an amount of €0.8 billion, and the capital increase at QuantumScape Battery and the realization
+of a forward purchase transaction in this context in an amount of €0.5 billion. Additional disclosures on Gotion
+High-Tech Company and Northvolt AB can be found in the "Key events" section.
+Changes in consolidated Group
+Additions
+Transfers
+-5
+-5
+-10
+-108
+57
+-52
+185
+245
+429
+Disposals
+72,916
+Reversal of impairment losses
+Carrying amount at Dec. 31, 2020
+1 Dividends are shown before withholding tax.
+41
+41
+11
+1
+12
+531
+10,080
+968
+1,499
+1,865
+11,945
+Equity-accounted investments include joint ventures in the amount of €6,905 million (previous year:
+€6,951 million) and associates in the amount of €5,627 million (previous year: €3,129 million).
+Balance at Dec. 31, 2020
+instruments
+75,296
+Direct banking
+34,519
+84,954
+53,462
+141,452
+54,481
+143,651
+18,127
+58,006
+34,408
+52,534
+53,689'
+82,565
+140,571
+144,078
+1 Prior-year figures adjusted.
+The receivables from customer and dealer financing are secured by vehicles or real property liens. Of the receivables,
+€65 million (previous year: €33 million) was furnished as collateral for financial liabilities and contingent liabilities.
+The receivables from dealer financing include €25 million (previous year: €35 million) receivable from
+unconsolidated affiliated companies.
+Consolidated Financial Statements
+17. Noncurrent and current other financial assets
+€ million
+Positive fair values
+Notes to the Consolidated Financial Statements
+285
+CARRYING AMOUNT
+CARRYING AMOUNT
+Current
+Noncurrent
+Dec. 31, 2021
+Current
+Noncurrent
+Dec. 31, 2020
+56,498
+18,943
+finance leases
+Receivables from
+9,647
+311
+1,785
+12
+11,432
+322
+11,420
+323
+12,435
+307
+1,994
+14,428
+14,400
+7
+314
+315
+37,230
+Dealer financing
+50,435
+88,846
+39,500
+48,157
+87,658
+90,010
+Receivables from
+operating leases
+325
+325
+325
+379
+379
+379
+87,665
+Foreign exchange differences
+Noncurrent
+Deferred tax assets
+Tax receivables
+2
+-193
+98
+-19
+115
+Transfers
+127
+6
+18
+46
+58
+Additions to cumulative impairment losses
+11,838
+6,561
+3,226
+2,050
+Additions to cumulative amortization
+71
+28
+9
+34
+Changes in consolidated Group
+-2,701
+-9
+-1,393
+-973
+-326
+Disposals
+177
+1,116
+1,760
+Lease assets
+€ million
+CHANGES IN LEASE ASSETS AND INVESTMENT PROPERTY IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2021
+14. Lease assets and investment property
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+280
+In connection with land and buildings, real property liens of €1,528 million (previous year adjusted:
+€1,462 million) are pledged as collateral for partial retirement obligations, financial liabilities and other liabilities.
+Government grants of €328 million (previous year: €156 million) were deducted from the cost of property, plant
+and equipment.
+63,884
+7,736
+17,981
+12,158
+Foreign exchange differences
+26,009
+123,245
+30
+66,408
+37,665
+19,142
+Balance at Dec. 31, 2020
+3,066
+16
+3
+7
+6
+0
+Reversal of impairment losses
+13
+Carrying amount at Dec. 31, 2020
+Investment property
+116,991
+62,862
+153
+Changes in consolidated Group
+-4,214
+183,143
+7,526
+-200
+-1,765
+-1,343
+-907
+Foreign exchange differences
+81,997
+50,090
+43,531
+Balance at Jan. 1, 2020
+Cost
+Total
+account and
+assets under
+construction
+equipment,
+operating and
+office equipment
+Technical
+equipment and
+machinery
+including
+buildings on
+third-party land
+Payments on
+Other
+Land, land rights
+and buildings,
+€ million
+CHANGES IN PROPERTY, PLANT AND EQUIPMENT IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2020
+279
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+0
+47
+-32
+168
+36,498
+17,389
+Balance at Jan. 1, 2020
+Amortization and impairment
+187,129
+7,766
+84,389
+49,822
+45,151
+Balance at Dec. 31, 2020
+3,613
+56
+1,920
+242
+1,246
+Disposals
+105
+-3,883
+2,096
+1,040
+852
+Transfers
+11,540
+4,410
+3,935
+1,281
+1,914
+Additions
+392
+Dec. 31, 2020
+Total
+Balance at Jan. 1, 2021
+5,291
+5,337
+344
+288
+-2
+6
+43,725
+43,823
+At the same time as the relevant revenue was recognized, inventories in the amount of €181 billion (previous
+year adjusted: €165 billion) were included in cost of sales. Loss allowances (excluding lease assets) recognized as
+expenses in the reporting period amounted to €594 million (previous year: €697 million). Vehicles with a value
+amounting to €345 million (previous year: €320 million) were assigned as collateral for partial retirement
+obligations.
+The entire industry is currently experiencing supply shortages of semiconductor components. This fact had
+an effect on the structure of inventories as of December 31, 2021, causing a reduction in finished goods compared
+with December 31, 2020, set against an increase in inventories of work in progress and raw materials.
+288
+Notes to the Consolidated Financial Statements
+21. Trade receivables
+€ million
+Trade receivables from
+third parties
+unconsolidated subsidiaries
+joint ventures
+associates
+other investees and investors
+The fair values of the trade receivables correspond to the carrying amounts.
+Consolidated Financial Statements
+Dec. 31, 2021
+Dec. 31, 2020
+11,897
+334
+12,706
+181
+27,204
+22,201
+4,022
+6,559
+13,393
+13,393
+13,486
+13,486
+1,618
+635
+2,252
+1,618
+14,027
+15,645
+1,186
+1,186
+376
+1,563
+3,246
+13,862
+Deferred tax assets include an amount of €7,473 million (previous year: €7,405 million) arising from recognition
+and measurement differences between IFRS carrying amounts and the tax base, which will reverse within one
+year.
+20. Inventories
+€ million
+Raw materials, consumables and supplies
+Work in progress
+Finished goods and purchased merchandise
+Current lease assets
+Prepayments
+Hedges on inventories
+Dec. 31, 2021
+Dec. 31, 2020
+9,331
+6,966
+15,049
+Cost
+3,305
+50
+80,092
+947
+79,146
+Balance at Dec. 31, 2021
+20,139
+3
+20,136
+Disposals
+-24
+2
+-26
+Transfers
+29,117
+9
+29,108
+Additions
+331
+48
+283
+Changes in consolidated Group
+2,812
+21
+2,791
+Foreign exchange differences
+67,996
+869
+67,127
+Amortization and impairment
+Balance at Jan. 1, 2021
+16,441
+311
+2
+15,521
+16,243
+22. Marketable securities
+The marketable securities serve to safeguard liquidity. They are mainly short-term fixed-income securities and
+shares. Most securities are measured at fair value. Current securities amounting to €485 million (previous year:
+€661 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.
+23. Cash, cash equivalents and time deposits
+€ million
+Bank balances
+Checks, cash-in-hand, bills and call deposits
+Dec. 31, 2021
+Dec. 31, 2020
+39,363
+361
+39,723
+33,403
+507
+33,909
+42
+1
+Bank balances are held at various banks in different currencies and include time deposits, for example.
+9,582
+18
+9,564
+Additions to cumulative amortization
+10
+0
+10
+Changes in consolidated Group
+898
+4
+894
+Foreign exchange differences
+16,752
+Additions to cumulative impairment losses
+1,183
+-3,068
+470
+7,282
+Disposals
+36
+1
+35
+Transfers
+765
+1
+764
+Additions to cumulative impairment losses
+8,662
+17
+8,645
+Additions to cumulative amortization
+3
+3
+Changes in consolidated Group
+-979
+-4
+-975
+Foreign exchange differences
+15,753
+307
+15,446
+Balance at Jan. 1, 2020
+11
+7,293
+Reversal of impairment losses
+195
+Disposals
+Classified as held for sale
+Transfers
+Additions
+Changes in consolidated Group
+Foreign exchange differences
+Balance at Jan. 1, 2021
+Gross carrying amount
+€ million
+CHANGES IN EQUITY-ACCOUNTED INVESTMENTS AND OTHER EQUITY INVESTMENTS
+IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2021
+15. Equity-accounted investments and other equity investments
+Notes to the Consolidated Financial Statements
+67,996
+282
+Investment property includes apartments rented out and leased dealerships with a fair value of €1,436 million
+(previous year: €1,199 million). Fair value is estimated using an investment method based on internal calculations
+(Level 3 of the fair value hierarchy). Operating expenses of €64 million (previous year: €55 million) were incurred
+for the maintenance of investment property in use. Expenses of €1.0 million (previous year: €0.4 million) were
+incurred for unused investment property.
+Lease assets include assets leased out under the terms of operating leases and assets covered by long-term buyback
+agreements.
+51,244
+558
+50,686
+Carrying amount at Dec. 31, 2020
+16,752
+311
+16,441
+Balance at Dec. 31, 2020
+195
+0
+Rental income from investment property amounted to €58 million in the fiscal year (previous year: €58 million).
+Changes recognized in profit or loss
+869
+Amortization and impairment
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+60,313
+615
+59,699
+Carrying amount at Dec. 31, 2021
+19,779
+332
+19,447
+Balance at Dec. 31, 2021
+660
+0
+659
+Reversal of impairment losses
+7,234
+1
+7,234
+Disposals
+-4
+0
+-4
+Transfers
+434
+434
+714
+281
+CHANGES IN LEASE ASSETS AND INVESTMENT PROPERTY IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2020
+€ million
+Lease assets
+Balance at Dec. 31, 2020
+19,159
+19
+19,139
+Disposals
+39
+67
+Transfers
+24,799
+27
+24,772
+Additions
+67,127
+15
+Changes in consolidated Group
+-2,995
+-23
+-2,972
+Foreign exchange differences
+65,229
+845
+64,384
+Balance at Jan. 1, 2020
+Cost
+Total
+Investment property
+15
+Dividends¹
+106
+Balance at Dec. 31, 2021
+-756
+-73
+-24
+-49
+Changes in consolidated Group
+Foreign exchange differences
+11,255
+2,616
+8,639
+Balance at Jan. 1, 2020
+Gross carrying amount
+Total
+-186
+Other equity investments
+€ million
+CHANGES IN EQUITY-ACCOUNTED INVESTMENTS AND OTHER EQUITY INVESTMENTS
+IN THE PERIOD JANUARY 1 TO DECEMBER 31, 2020
+283
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+1 Dividends are shown before withholding tax.
+15,531
+3,000
+12,531
+Carrying amount at Dec. 31, 2021
+1,604
+1,033
+Equity-accounted
+investments
+571
+-943
+488
+Balance at Jan. 1, 2020
+Other changes recognized in other comprehensive income
+Impairment losses
+13,443
+2,833
+10,610
+Balance at Dec. 31, 2020
+-288
+-8
+-280
+Other changes recognized in other comprehensive income
+-3,195
+Additions
+-3,195
+2,690
+-3
+2,693
+Changes recognized in profit or loss
+246
+50
+196
+Disposals
+0
+0
+Transfers
+4,244
+Dividends¹
+99
+3,756
+51
+134
+35
+4
+4
+3,941
+1,066
+2,875
+-75
+285
+-360
+56
+300
+169
+13,443
+10,610
+Total
+Other equity investments
+Equity-accounted
+investments
+Consolidated Financial Statements
+Transfers
+Additions
+Changes in consolidated Group
+Foreign exchange differences
+48
+Balance at Jan. 1, 2021
+Impairment losses
+2,833
+2,172
+355
+2,214
+Reversal of impairment losses
+Balance at Dec. 31, 2021
+43
+42
+43
+Disposals
+197
+118
+79
+19
+32
+20
+12
+1,499
+19
+531
+འབ
+17,135
+4,033
+13,102
+497
+-110
+608
+968
+-3,068
+VOLKSWAGEN GROUP REPORTING STRUCTURE
+Power Engineering Business Area
+Power Engineering
+The Volkswagen Group faced challenges in fiscal year 2021 due to the
+Covid-19 pandemic and the limited vehicle availability as a result of the
+semiconductor shortage.
+Commercial Vehicles Business Area
+Scania Vehicles and Services
+MAN Commercial Vehicles
+Navistar
+AUTOMOTIVE
+DIVISION
+Others
+Volkswagen Commercial Vehicles
+Porsche Automotive
+Audi
+Bentley
+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, engines and
+vehicle software, and the production and sale of passenger cars, light commercial vehicles, trucks, buses and
+motorcycles, as well as businesses for genuine parts, large-bore diesel engines, turbomachinery and propulsion
+components. 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. Navistar has supplemented the brands in the
+Commercial Vehicles Business Area since July 1, 2021. The Financial Services Division's activities comprise
+dealer and customer financing, vehicle leasing, direct banking and insurance activities, fleet management and
+mobility services.
+Passenger Cars Business Area
+Volkswagen Passenger Cars
+ŠKODA
+SEAT
+FINANCIAL SERVICES
+GROUP STRUCTURE
+DIVISION
+The Covid-19 pandemic and the limited vehicle availability due to the semiconductor shortage had a negative
+impact on business at the Volkswagen Group and its brands in 2021. In the reporting year, the Volkswagen
+Group generated an operating result before special items of €20.0 (10.6) billion. Special items resulting from the
+diesel issue weighed on operating result in the amount of €-0.8 (-0.9) billion.
+Direct bank
+Insurance
+In the North American markets, unit sales in the reporting period were 8.2% up on the prior-year figure at
+805 thousand vehicles. Due in particular to higher volumes and mix effects, as well as the consolidation of
+Navistar as from July 1, 2021, sales revenue rose to €45.3 (36.8) billion, more than compensating for the unfa-
+vorable exchange rate trends.
+We lifted our unit sales on markets in the South America region to 503 thousand vehicles in 2021, an
+increase of 6.8% compared with 2020. As a result, sales revenue climbed by 27.9% to €11.0 billion. Exchange rate
+movements had a negative effect.
+In the Europe/Other markets region, unit sales decreased by 5.2% year-on-year to 3.7 million vehicles. How-
+ever, positive mix effects helped to lift sales revenue to €145.6 (133.5) billion. Exchange rate movements had a
+negative effect.
+Brands and Business Fields
+In the Asia-Pacific region, the Volkswagen Group's unit sales – including the Chinese joint ventures - fell to
+3.5 (4.0) million vehicles in the reporting year. Driven by mix and exchange rate effects, sales revenue rose to
+€48.7 (44.3) billion. This figure does not include the sales revenue of our equity-accounted Chinese joint
+ventures.
+The Volkswagen Group's unit sales in the reporting year stood at 8.6 (9.2) million vehicles. Sales revenue
+increased by 12.3% to €250.2 billion due to mix-related factors.
+Dealer and customer financing
+Leasing
+KEY FIGURES BY MARKET
+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.
+Divisions
+Brands and Business Fields
+20
+20
+Fleet management
+Mobility services
+The production figures and deliveries to customers are differentiated by vehicle brands 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.
+19
+DELIVERIES BY MARKET
+Divisions
+801,910
+14,482
+Hedging transactions relating to sales revenue in foreign currency had a negative impact of €386 (345) mil-
+lion on the sales revenue of the Volkswagen Group in the reporting year.
+2,886
+940,853
+17,743
+1,083
+Fabia
+in percent
+5SE 2970
+Europe/Other Markets 86.8%
+North America 0.0%
+South America 0.2%
+Asia-Pacific
+13.0%
+FURTHER INFORMATION www.skoda-auto.com
+26
+96
+SEAT
+Divisions
+Increase in deliveries
+10.3%
+Sales revenue for SEAT increased by 4.5% in 2021 to €9.6 billion. The operating result stood at €-233 (-339) mil-
+lion. Positive volume effects, especially from the growth of CUPRA, were appreciably weakened by commodity
+price increases and the shortage of semiconductors, meaning that, after a weak year in 2020 due to the pan-
+demic, the recovery was incomplete. The operating return on sales was -2.4 (-3.7)%.
+SALES REVENUE AND EARNINGS
+SEAT and CUPRA produced 424 thousand vehicles in the reporting period. This was an increase of 4.2% year-
+on-year, despite the challenges due to the shortage of semiconductors.
+Brands and Business Fields
+The company's unit sales increased to 494 thousand units in the reporting year. This was 2.1% more than in
+the previous year. This figure also includes the A1 manufactured for Audi. The CUPRA Formentor, SEAT Arona
+and SEAT Ibiza recorded high demand.
+SEAT is the Group brand with Europe's youngest customer profile. In 2021, SEAT brought the updated Arona
+and Ibiza models to market. The design update of the Arona SUV brings its off-road character even more to the
+fore. The new Ibiza now features LED headlights as standard. Both vehicles offer a modern, digital interior with
+a larger infotainment system, improved voice recognition and new connectivity solutions. Additional driver
+assist systems and a wide range of efficient engines are also available.
+CUPRA is the unconventional challenger brand that brings together emotion, electrification and performance
+to inspire the world from Barcelona. The range of vehicles is based on a contemporary interpretation of perfor-
+mance and design. In 2021, the brand brought its first fully electric vehicle to market. The CUPRA Born, which
+has garnered important awards and positive reviews across Europe, marks the start of a new era. Based on the
+Volkswagen Group's MEB platform, it has a maximum range of up to 540 km. The model is available in two
+powertrain variants: 110 kW (150 PS) and 150 kW (204 PS). The latter comes with an e-Boost performance
+option that can increase the power output to 170 kW (231 PS).
+BUSINESS DEVELOPMENT
+SEAT is a company with two brands: SEAT and CUPRA. In 2021, the automotive
+manufacturer took the next step on the road to e-mobility and launched
+the all-electric CUPRA Born.
+SEAT CUPRA
+S
+At 471 thousand vehicles, deliveries to customers by SEAT and CUPRA were up 10.3% on the previous year
+in fiscal year 2021. The sales figures improved year-on-year in virtually all markets, partly thanks to the demand
+for electric vehicles and CUPRA models. The CUPRA brand virtually trebled its sales to 79 thousand vehicles.
+Divisions
+297
+Thousand vehicles/€ million
+9,909
+9,358
+73
+-454
+Audi
+1,009
+1,017
+53,068
+49,973
+5,546
+2,739
+Bentley
+15
+11
+2,845
+2,049
+389
+11,521
+903
+16,291
+13,927
+73
+91
+345
+Scania Vehicles and Services²
+5,006
+26,086
+30,289
+265
+Porsche Automotive¹
+20
+4,021
+KEY FIGURES BY BRAND AND BUSINESS FIELD
+326
+-339
+Brands and Business Fields
+21
+VEHICLE SALES
+SALES REVENUE
+OPERATING RESULT
+2021
+2020
+2021
+2020
+2021
+2020
+Volkswagen Passenger Cars
+2,719
+2,835
+76,127
+71,076
+2,503
+-233
+9,198
+9,614
+484
+494
+SEAT
+Volkswagen Commercial Vehicles
+756
+17,081
+17,743
+849
+784
+ŠKODA
+454
+1,083
+Citigo
+Gol
+939
+42,508
+55,899
+Saveiro
+40,212
+41,146
+Touareg
+34,957
+41,136
+Touran
+30,603
+56,833
+ID.6
+20,461
+Fox/Suran
+18,162
+12,184
+Sharan/Viloran
+Europe/Other Markets 29.2%
+North America 10.8%
+C
+in percent
+DELIVERIES BY MARKET
+K
+WOB.ID 51E
+Arteon/CC
+ID.5
+4,575,415
+10,344
+6,618
+Phideon
+32,142
+16,806
+5,080,763
+South America
+65,730
+Lamando
+2,503
+Golf
+267,352
+408,528
+Bora
+242,022
+329,263
+Tharu/Taos
+206,789
+149,781
+Atlas/Teramont
+180,873
+178,954
+JETTA
+157,157
+165,681
+Santana
+64,259
+73,738
+ID.3
+59,786
+75,616
+up!
+58,551
+117,471
+748
+6,487
+134,319
+ID.4
+174,966
+138,232
+131,129
+Kushaq
+7.8%
+i
+1,005
+-12.6
+849
+-7.7
+-14.8
+17,081
++3.9
+756
++43.2
+6.1
+4.4
+im
+94,105
+Sales revenue (€ million)
+Rapid/Scala
+Octavia
+193,045
+172,077
+233,902 Vehicle sales
+49,811
+Enyaq iV
+80,880 Operating return on sales (%)
+57,720
+Superb
+Operating result
+%
+117,825
+Kodiaq
+100,425
+Fabia
+172,999
+127,470
+Karoq/Kamiq
+88,505
+Asia-Pacific 52.2%
+941
+784
+FURTHER INFORMATION www.volkswagen.com
+24
+24
+ŠKODA
+ŠKODA
+ŠKODA presented the fourth generation of its popular Fabia model in 2021,
+which is now based on the Modular Transverse Toolkit for the first time. With the
+Kushaq SUV, the Czech brand also launched its India 2.0 market offensive.
+BUSINESS DEVELOPMENT
+The ŠKODA models are synonymous with smart understatement, featuring a superior spacious interior, the
+highest standards of functionality, excellent value for money and a distinctive design. Added to that are a
+number of "Simply Clever" ideas and new digital services, all aimed at making customers' lives easier.
+In fiscal year 2021, ŠKODA presented the fourth generation of the Fabia, which is now based on the Volks-
+wagen Group's Modular Transverse Toolkit for the first time. The successful small car is even more dynamic
+and grown-up than its predecessor, boasting proportions and lines that stir the emotions. With its generous
+space and ergonomic controls, every part of the interior has been designed with the passenger in mind. New
+infotainment functions and numerous safety and assistance systems round off the vehicle concept. ŠKODA is
+regearing itself in the Indian market and presented the first model in its India 2.0 brand offensive in the
+reporting year: the ŠKODA Kushaq. The model name is derived from the Sanskrit language and roughly trans-
+lates as “king”. The SUV combines the Czech brand's typical qualities with the preferences of Indian customers:
+with an attractive design and excellent functionality, paired with ŠKODA's “Simply Clever" ideas, the Kushaq is a
+quintessential ŠKODA SUV. The interior combines ŠKODA's classic SUV design with Indian applications.
+The ŠKODA brand delivered 0.9 (1.0) million vehicles worldwide in the reporting period. Sales increased
+year-on-year in France (+1.5%) and Spain (+19.2%) and more than doubled in India.
+ŠKODA sold 0.8 (0.8) million vehicles in the past fiscal year. There was strong demand for the Kamiq and
+Karoq SUVs, and the new Enyaq iV was also very popular with customers. The difference between figures for
+deliveries and unit sales is due mainly to the fact that the vehicle-producing joint ventures in China are not
+attributed to ŠKODA brand companies.
+ŠKODA produced 0.8 million vehicles worldwide in fiscal year 2021, a decrease of 14.8% versus 2020. The
+main plant in Mladá Boleslav celebrated a special milestone in the reporting year: 15 million vehicles have been
+manufactured there since automotive production began in 1905.
+SALES REVENUE AND EARNINGS
+Despite lower unit sales, the ŠKODA brand increased sales revenue by 3.9% to €17.7 billion in fiscal year 2021. In
+particular, positive margin and exchange rate effects as well as lower excess CO2 emissions premiums raised the
+operating result to €1.1 (0.8) billion. The operating return on sales amounted to 6.1%, contrasting with 4.4% in
+the previous year.
+15 million
+Vehicles manufactured at the Mladá Boleslav plant
+Divisions
+878
+2020
+2021
+Production
+219,401 Deliveries (thousand units)
+2020
+802
+2021
+25
+25
+ŠKODA
+ŠKODA BRAND
+PRODUCTION
+Divisions
+Units
+MAN Commercial Vehicles
+9,614
+-233
+118
+23
+Units
+2021
+2020
+Tiguan
+598,656
+754,276
+Polo/Virtus/Nivus/Taigo
+453,479
+467,765
+Deliveries (thousand units)
+Vehicle sales
+Lavida
+394,222
+416,209
+Passat/Magotan
+379,614
+477,892
+2021
+Operating return on sales (%)
+285,299
+282,748
+T-Roc
+special items
+23
+285,824
+T-Cross/Tacqua/Taigun
+Operating result before
+422,908
+295,490
+Jetta/Sagitar
+Sales revenue (€ million)
+295,101
+2020
+VOLKSWAGEN PASSENGER CARS BRAND
+PRODUCTION
+36,810
+503
+471
+11,039
+8,632
+3,540
+4,012
+48,672
+44,288
+-386
+-345
+8,576
+9,157
+250,200
+222,884
+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.
+22
+Divisions
+Divisions
+Volkswagen Slovakia
+30 years
+The Volkswagen Passenger Cars brand increased its sales revenue by 7.1% year-on-year to €76.1 billion in 2021.
+The operating result before special items was influenced by margin-related factors and stood at €2.5 (0.5) bil-
+lion. This was higher than the previous year's figure, which was particularly affected by the pandemic. Upfront
+expenditure for new products and technologies increased. The operating return on sales before special items
+amounted to 3.3 (0.6)%. The diesel issue gave rise to special items of €-0.7(-0.8) billion.
+SALES REVENUE AND EARNINGS
+Volkswagen Passenger Cars
+The Volkswagen Passenger Cars brand produced 4.6 (5.1) million vehicles worldwide in 2021. In May 2021,
+Volkswagen Slovakia - consisting of the sites in Bratislava, Martin and Stupava - celebrated its 30th anniversary.
+The multi-brand plant in Bratislava currently produces eight models for five Group brands under one roof.
+The Volkswagen Passenger Cars brand delivered 4.9 million vehicles worldwide in fiscal year 2021. The
+decline of 8.1% was due chiefly to the limited vehicle availability as a result of the semiconductor shortage. In
+the USA, sales increased by 15.1%.
+In fiscal year 2021, the Volkswagen Passenger Cars brand launched the ID.4, the first all-electric SUV in the
+ID. family. Athletic proportions, a sleek design and a sculptured rear are the hallmarks of its exterior and give
+the all-rounder excellent aerodynamics. The impressive interior has generous space, puristic design, intuitive
+controls and sustainable upholstery materials. The recognition as "World Car of the Year 2021" underlines the
+brand's ambition to combine performance and everyday practicality with the ID.4. The ID.4 is currently built
+and sold in the core markets of Europe and China. This will be extended in future to include the United States.
+The ID.4 CROZZ, ID.4 X and ID.4 GTX are derivatives of the base model. In late autumn of the reporting year,
+Volkswagen Passenger Cars presented another model belonging to the ID. family. The new ID.5 is impressive
+with a its futuristic form that combines the strengths of an SUV with the aerodynamic silhouette of a coupé,
+creating a modern symbiosis of the two. The popular Golf family celebrated the 45th anniversary of the
+Golf GTI in the reporting year. To mark the anniversary of the sporty icon, the Volkswagen Passenger Cars brand
+presented the special-edition Golf GTI "Clubsport 45". The exclusive anniversary model has 221 kW (300 PS) of
+power and pays homage to the first Golf GTI with its special GTI features.
+The Volkswagen Passenger Cars brand aims to move people. The centerpiece of the ACCELERATE 2030 strategy is
+a global initiative through which the brand aspires to transform itself into a technology and software business
+focused on customer needs.
+BUSINESS DEVELOPMENT
+In the 2021 fiscal year, Volkswagen Passenger Cars celebrated the market debut of the
+ID.4, the brand's first all-electric SUV. The ID. family gained a new member with the
+ID.5, a modern symbiosis of SUV and coupé.
+Volkswagen Passenger Cars
+The Volkswagen Passenger Cars brand sold 2.7 (2.8) million vehicles in the reporting year. There was strong
+demand for the T-Roc, T-Cross and Atlas models, and the ID.3 and ID.4 models were also very popular. The
+difference between deliveries and unit sales is due mainly to the fact that the vehicle-producing joint ventures
+in China are not attributed to the companies in the Volkswagen Passenger Cars brand.
+45,305
+%
+Production
+34,285
+SEAT and CUPRA
+423,597
+406,452
+CUPRA Born
+DELIVERIES BY MARKET
+in percent
+8485 LPR
+Europe/Other Markets 94.8%
+North America 4.5%
+South America 0.7%
+Asia-Pacific
+0.1%
+i FURTHER INFORMATION www.seat.com
+12
+27
+28
+Volkswagen Commercial Vehicles
+Commercial
+Vehicles
+In 2021, the Volkswagen Commercial Vehicles brand celebrated the world premiere of
+its new Multivan, now in its seventh generation, ushering in a new era for customers
+and brand alike. Another highlight was the presentation of the Caddy Maxi.
+76,127
+71,076
+Divisions
+Increase in sales revenue
+5.9%
+At €9.9 billion, sales revenue for the Volkswagen Commercial Vehicles brand in fiscal year 2021 was 5.9% higher
+than in the previous year. The operating result increased to €73 (−454) million with a positive impact from mix
+effects in particular, but also from better price positioning and lower development costs. Lower excess CO2
+emissions premiums were taken into account compared with the previous year. The operating return on sales
+increased to 0.7 (-4.9)%.
+81,839
+SALES REVENUE AND EARNINGS
+Volkswagen Commercial Vehicles sold 326 thousand vehicles in the reporting period, 5.6% fewer than in the
+previous year. However, growth was seen above all by the Crafter and the Multivan/Transporter. The California
+models were also very popular, with sales increasing to 29.2%.
+Deliveries by Volkswagen Commercial Vehicles in fiscal year 2021 stood at 360 thousand units (−3.2%). Sales
+increased in Spain (+3.3%), Turkey (+17.0%) and Argentina (+44.6%).
+The ID. Buzz, the fully electric version of the iconic “Bulli” and one of the most important new models from
+the Volkswagen Commercial Vehicles brand, is ready and waiting in the starting blocks. And the successor to the
+Amarok, developed in cooperation with Ford, is also lined up for 2022.
+In 2021, the Volkswagen Commercial Vehicles brand presented the seventh generation of its bestseller: the
+Multivan. The latest version of the “Bulli” boasts an improved seat and cargo space system, a lounge-style inte-
+rior, a newly designed instrument panel and an integrated display landscape. A first for the model range is the new
+160 kW (218 PS) plug-in hybrid drive, which combines local emission-free driving with large ranges and a low
+total fuel consumption. The new Multivan is thus ushering in a new era for the brand on its Way to Zero. The
+Caddy Maxi was also presented in the reporting year. At 35 cm longer than the base version, the Caddy Maxi
+offers more space and more options: a trouble-free way to transport bulky items or carry up to seven people.
+As a leading manufacturer of light commercial vehicles, Volkswagen Commercial Vehicles is making funda-
+mental 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. That is why the brand is the Volkswagen Group's leader in autono-
+mous driving as well as in mobility services such as Mobility-as-a-Service and Transport-as-a-Service. For these
+solutions, Volkswagen Commercial Vehicles will develop special-purpose vehicles such as robo-taxis and robo-
+vans in the future. The Hanover site will be home to the production of vehicles from the Group's Artemis
+project as well as the bodywork for a new Bentley model. In this way, the brand will continue to keep the world
+of tomorrow moving, with all of its requirements regarding for clean, intelligent and sustainable mobility. This
+is what Volkswagen Commercial Vehicles stands for with its brand promise: We transport success, freedom and
+the future.
+BUSINESS DEVELOPMENT
+In 2021, the Volkswagen Commercial Vehicles brand produced 335 thousand vehicles, 2.5% fewer than in
+the previous year.
+6111
+10,825
+Ateca
+3.3
+454
+0.6
+X
+4,897
+5,328
+-8.1
+2,719
+2,835
+-4.1
+4,575
+5,081
+-2.4
+-3.7
+Mii
+8,648
+7,593
+4,801
+Born
+12,419
+13,670
+Leon
+11,041
+4,505
+58,863
+CUPRA
+372,167
+341,758
+14,672
+4,169
+Alhambra
+Formentor
+151
+744
+133,499
+19,275
+9,675
+Automotive Division6
+8,576
+9,157
+206,237
+182,106
+13,230
+6,664
+of which: Passenger Cars Business Area
+8,303
+8,965
+172,868
+156,311
+13,051
+7,224
+Commercial Vehicles Business Area
+40,778
+43,963
+Financial Services Division
+-482
+45
+3,640
+222,884
+3,278
+-79
+134
+22,156
+30,092
+191
+273
+Power Engineering Business Area
+6,045
+250,200
+8,576
+13,000
+10,838
+-276
+-631
+At equity accounted companies in China³
+3,042
+3,577
+Power Engineering4
+3,278
+3,640
+179
+-268
+Volkswagen Financial Services
+41,662
+38,637
+5,672
+2,803
+Volkswagen Group
+-931
+-751
+Special items
+10,607
+20,026
+9,157
+Volkswagen Group before special items
+-818
+-26,573
+-21,263
+-418
+-353
+Other5
+759
+805
+3,012
+2 Scania (including Financial Services): sales revenue €14,400 (11,950) million, operating result €1,119 (855) million.
+ETT
+Production
+427
++10.3
+494
+484
++2.1
+424
+406
+9,198
++4.2
++4.5
+-339
++31.2
+6 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.
+KEY FIGURES BY MARKET
+Thousand vehicles/€ million
+Europe/Other Markets
+145,570
+3,929
+3,727
+2020
+2021
+2020
+471
+2021
+VEHICLE SALES
+Volkswagen Group¹
+Hedges on sales revenue
+Asia-Pacific¹
+South America
+North America
+SALES REVENUE
+1 Porsche (including Financial Services): sales revenue €33,138 (28,695) million, operating result before special items €5,286 (4,176) million.
+%
+2021
+3 The sales revenues and operating results of the joint venture companies in China are not included in the figures for the Group.
+These Chinese companies recorded a proportionate operating result of €3,026 (3,602) million.
+4 Prior-year figure includes the business of Renk.
+5 In operating result, 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. Includes Navistar from
+July 1, 2021.
+Divisions
+PRODUCTION
+SEAT
+SEAT
+Units
+2021
+2020
+SEAT
+Arona
+98,656
+78,823
+2020
+Ibiza
+74,564
+Deliveries (thousand units)
+Vehicle sales
+Operating return on sales (%)
+18,726
+22,437
+Tarraco
+83,710
+Operating result
+53,995
+Ateca
+Sales revenue (€ million)
+111,904
+70,143
+Leon
+65,885
+-9.9
++7.1
+DEC. 31, 2020
+€ million Change in percent
+Notes to the Consolidated Financial Statements
+€ million
+2020
+Liabilities from advance payments received under contracts with customers at Jan. 1
+Additions and disposals
+11,398
+10,907
+975
+847
+Changes in consolidated Group
+14
+13
+Foreign exchange differences
+Liabilities from advance payments received under contracts with customers at Dec. 31
+375
+-369
+12,762
+11,398
+28. Tax liabilities
+5,131
+5,131
+3,392
+2,863
+Provisions for taxes
+Deferred tax liabilities
+Dec. 31, 2020
+The liabilities from payments on account received under contracts with customers correspond to the contract
+liabilities under contracts with customers; they are part of the payments received on account of orders. They
+changed as follows:
+Noncurrent
+Dec. 31, 2021
+Noncurrent
+Current
+CARRYING AMOUNT
+CARRYING AMOUNT
+€ million
+Current
+4,890
+25,884
+17,979
+other taxes
+2,958
+122
+3,080
+3,294
+110
+3,404
+social security
+674
+126
+801
+616
+112
+727
+wages and salaries
+5,371
+815
+28,320
+8,430
+19,890
+3,267
+1,183
+2,085
+7,905
+3,809
+2,233
+Miscellaneous liabilities
+5,462
+960
+4,501
+6,186
+1,576
+Liabilities relating to
+4,890
+2,213
+13,264
+Funded status (net)
+9,165
+10,838
+Present value of unfunded obligations
+32,105
+34,200
+Amount not recognized as an asset because of the ceiling in IAS 19
+106
+2
+Net liability recognized in the balance sheet
+41,376
+45,040
+of which provisions for pensions
+of which other assets
+41,550
+175
+45,081
+Since the assets administered in trust meet the IAS 19 criteria for classification as plan assets, they are
+deducted from the obligations.
+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).
+German pension plans funded by external plan assets
+295
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+17,285
+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.
+The present value of the guaranteed obligation rises as interest rates fall and is therefore exposed to interest
+rate risk.
+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.
+German pension plans funded solely by recognized provisions
+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 aforementioned 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.
+SIGNIFICANT PENSION ARRANGEMENTS IN THE VOLKSWAGEN GROUP
+41
+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.
+6,256
+24,101
+Fair value of plan assets
+3,292
+5,505
+Tax payables
+614
+3,478
+614
+340
+340
+8,523
+12,001
+2,552
+8,181
+10,734
+Deferred tax liabilities include an amount of €503 million (previous year: €502 million) arising from recognition
+and measurement differences between IFRS carrying amounts and the tax base, which will reverse within one
+year.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+293
+29. Provisions for pensions and other post-employment benefits
+Present value of funded obligations
+Dec. 31, 2020
+Dec. 31, 2021
+Consolidated Financial Statements
+€ million
+The following amounts were recognized in the balance sheet for defined benefit plans:
+26,449
+Notes to the Consolidated Financial Statements
+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 2021, €20 million (previous year: €15 million) was recognized as an expense for
+healthcare costs. The related carrying amount as of December 31, 2021 was €800 million (previous year:
+€228 million).
+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 €27 million for fiscal year 2022.
+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, from
+changes in assumptions, as well as from gains or losses on plan assets, excluding amounts included in net interest
+income or expenses. They are recognized in other comprehensive income, net of deferred taxes, in the period in
+which they arise.
+In the case of defined benefit plans, a distinction is made between pensions funded by provisions and externally
+funded plans.
+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 2021, they amounted to a total of €2,660 million (previous year:
+€2,622 million) in the Volkswagen Group. Of this figure, contributions to the compulsory state pension system
+in Germany amounted to €1,825 million (previous year: €1,826 million).
+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.
+294
+13,024
+5,541
+7,484
+29,145
+291
+Loans and miscellaneous
+liabilities
+1,944
+875
+2,819
+794
+1,909
+2,702
+Lease liabilities
+1,108
+5,137
+6,245
+1,005
+5,119
+6,124
+Noncurrent
+Current
+Dec. 31, 2021
+CARRYING AMOUNT
+CARRYING AMOUNT
+Noncurrent
+Current
+2,411
+€ million
+203,457
+114,809
+88,648
+210,202
+131,618
+78,584
+26. Noncurrent and current other financial liabilities
+Dec. 31, 2020
+26,735
+2,588
+CARRYING AMOUNT
+CARRYING AMOUNT
+Current
+Noncurrent
+Dec. 31, 2021
+Current
+Noncurrent
+Dec. 31, 2020
+Bonds
+21,722
+76,317
+98,038
+25,909
+66,717
+92,626
+Commercial paper and notes
+16,781
+24,243
+Deposits business
+35,333
+17,273
+18,060
+38,691
+26,831
+25,904
+Liabilities to banks
+37,526
+21,380
+16,146
+37,578
+20,796
+12,786
+Negative fair values of
+derivative financial
+instruments
+244
+14'
+42
+100
+2,822
+1,284
+3,200
+1,477
+1,222
+1,932'
+4,422
+3,409
+Further details on derivative financial instruments as a whole are given in the section entitled “Financial risk
+management and financial instruments".
+292
+Notes to the Consolidated Financial Statements
+27. Noncurrent and current other liabilities
+€ million
+14,445
+5,792
+8,653
+of orders
+Dec. 31, 2020
+Noncurrent
+39
+Current
+Noncurrent
+Current
+CARRYING AMOUNT
+CARRYING AMOUNT
+Consolidated Financial Statements
+Payments received on account
+Dec. 31, 2021
+17
+39
+75
+8,512
+12,300
+2,311
+9,989
+liabilities
+Miscellaneous financial
+13,002
+3,409
+702
+1,474
+604
+4,422
+746
+2,047
+108
+638
+Interest payable
+2,375
+1,935
+97
+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.
+4,466
+10,590
+Dec. 31, 2020
+Dec. 31, 2021
+1 Prior-year figures adjusted.
+Liabilities related to derivatives not included in hedging relationships
+Total
+foreign currency and price risk from future cash flows (cash flow hedges)
+Hedging transactions Total
+interest rate risk using cash flow hedges
+17,468
+interest rate risk using fair value hedges
+foreign currency risk from assets using fair value hedges
+Transactions for hedging
+€ million
+The negative fair values of derivatives relate to the following items:
+10,737
+14,847
+2,224
+4,257
+foreign currency risk from liabilities using fair value hedges
+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.
+2021
+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:
+points higher
+Payroll trend
+is 0.5
+percentage
+-4.71
+55,552
+-4.37
+55,994
+points lower
+percentage
+is 0.5
+5.25
+61,360
+4.86
+61,402
+points higher
+Pension trend
+is 0.5
+percentage
+€ million
+Notes to the Consolidated Financial Statements
+€ million Change in percent
+Discount rate
+is 0.5
+percentage
+points higher
+52,999
+58,969
+-9.49
+-9.77
+is 0.5
+percentage
+points lower
+64,766
+10.61
+64,981
+11.46
+52,604
+25. Noncurrent and current financial liabilities
+0.71
+0.87
+16
+32
+180
+-471
+341
+-219
+Present value of obligations at December 31
+58,555
+58,301
+In the previous year, a pension plan in the USA funded by external plan assets was settled. The resulting decrease
+in the present value of the defined benefit obligation in the amount of €520 million is shown under other
+changes. The plan settlement led to a loss of €7 million.
+298
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Changes in the relevant actuarial assumptions would have had the following effects on the defined benefit obligation:
+Present value of defined benefit obligation if
+DEC. 31, 2021
+The average duration of the defined benefit obligation weighted by the present value of the defined benefit
+obligation (Macaulay duration) is 20 years (previous year: 21 years).
+is 0.5
+percentage
+Longevity
+points lower
+increases by
+one year
+57,942
+-1.05
+58,808
+57,843
+60,641
+3.56
+60,385
+3.57
+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.
+-0.79
+Consolidated Financial Statements
+694
+-2,873
+Dividend paid to noncontrolling interest shareholders
+Other comprehensive income, net of tax
+Earnings after tax
+Sales revenue
+Current liabilities
+Noncurrent liabilities
+Current assets
+Noncurrent assets
+Equity interest
+Equity interest in %1
+€ million
+The table below shows summarized financial information of the TRATON GROUP, including amortized goodwill
+and fair value adjustments, which were determined at the acquisition date:
+The merger of MAN SE with TRATON SE was adopted by resolution of the Annual General Meeting of MAN SE
+on June 29, 2021. The shares held by the noncontrolling interest shareholders of MAN SE were also transferred to
+TRATON SE against payment of an appropriate cash settlement in the context of this merger (merger squeeze-
+out). The squeeze-out took legal effect upon entry in the commercial register for TRATON SE and MAN SE on
+August 31, 2021. As a result, the interest held by TRATON SE in MAN SE increased from 94.36% to 100% (see "Key
+events" section for details).
+On February 28, 2020, Volkswagen AG announced that it was planning to increase its interest in AUDI AG from
+approximately 99.64% to 100%. On July 31, 2020, the Annual General Meeting of AUDI AG resolved to implement a
+squeeze-out under stock corporation law. The transaction reduced equity by €0.2 billion in the previous
+year.
+As of December 31, 2021, noncontrolling interests amounted to €1,705 million (previous year: €1,734 million).
+Most of the noncontrolling interests in equity arose as a result of the IPO of the TRATON GROUP in fiscal year
+2019.
+NONCONTROLLING INTERESTS
+Consolidated Financial Statements
+289
+24. 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.
+The subscribed capital is composed of 295,089,818 no-par value ordinary shares (previous year: 295,089,818)
+and 206,205,445 no-par value preferred shares (previous year: 206,205,445), and amounts to €1,283,315,873
+(previous year: €1,283,315,873).
+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.
+Gross cash flow
+DIVIDEND PROPOSAL
+A dividend of €4.80 per ordinary share and €4.86 per preferred share was distributed in fiscal year 2021.
+HYBRID CAPITAL
+In January 2021, Volkswagen AG called a hybrid note (maturity: 7 years) with a principal amount of €1.25 billion,
+which had been placed in 2014 via Volkswagen International Finance N.V., Amsterdam, the Netherlands (issuer).
+Once called, the note had to be classified as debt in accordance with IAS 32, thus reducing the equity and net
+liquidity of the Volkswagen Group. The hybrid note was redeemed in March 2021.
+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 is called.
+290
+Notes to the Consolidated Financial Statements
+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, following the transfer of €13,450 million from revenue reserves, net retained
+profits of €19,101 million are eligible for distribution, from which a dividend could be distributed in connection
+with a possible IPO of Dr. Ing. h. c. F. Porsche AG (for more information, see disclosure in "Events after the balance
+sheet date"). The Board of Management and Supervisory Board will propose to the Annual General Meeting that
+a total dividend of €3,772 million, i.e. €7.50 per ordinary share and €7.56 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.
+Change in working capital
+Cash flows from operating activities
+Cash flows from investing activities
+466
+-161
+469
+-288
+23
+1
+22,580
+2,704
+-1,170
+17
+1,534
+1,987
+-4,406
+-1,293
+1,970
+3,078
+30,620
+19,829
+Net cash flow
+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.
+2021
+2020
+10.28
+10.28
+15,459
+1,270
+40,099
+29,599
+16,232
+14,401
+22,272
+14,582
+1,495
+7
+1 The percentage only includes direct noncontrolling interests.
+-99
+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
+2021
+2020
+Net liability recognized in the balance sheet at January 1
+45,040
+41,324
+Current service cost
+2,419
+2,215
+Net interest expense
+352
+459
+Actuarial gains (-)/losses (+) arising from changes in demographic assumptions
+0
+Employer contributions to plan assets
+0
+12
+Change in amount not recognized as an asset because of the ceiling in IAS 19
+677
+719
+The payroll trends cover expected wage and salary trends, which also include increases attributable to career
+development.
+Income/expenses from plan assets not included in interest income
+-75
+Actuarial gains (-)/losses (+) arising from experience adjustments
+4,393
+-4,879
+Actuarial gains (-)/losses (+) arising from changes in financial assumptions
+-420
+-394
+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 Corporate Bond index was taken as the basis for the obligations of German Group
+companies. Similar indices were used for foreign pension obligations.
+Consolidated Financial Statements
+Consolidated Financial Statements
+Payroll trend
+1.70
+2.42
+0.70
+1.21
+Discount rate at December 31
+3.25
+2020
+2020
+2021
+ABROAD
+GERMANY
+%
+-1
+2021
+1,003
+3.31
+2.74
+Notes to the Consolidated Financial Statements
+296
+5.30
+6.03
+Annual increase in healthcare costs
+4.36
+3.33
+3.85
+1.18
+Employee turnover rate
+2.50
+3.03
+1.49
+Pension trend
+1.16
+929
+1.69
+-14
+Current service cost
+2,419
+2,215
+Interest cost
+504
+631
+Actuarial gains(-)/losses (+) arising from changes in demographic assumptions
+0
+-420
+Actuarial gains(-)/losses (+) arising from changes in financial assumptions
+-4,879
+4,393
+Actuarial gains(-)/losses (+) arising from experience adjustments
+-75
+-394
+Employee contributions to plan assets
+Pension payments from company assets
+-2
+Employee contributions to plan assets
+292
+370
+885
+933
+53,800
+17
+Foreign exchange differences from foreign plans
+Other changes
+Classified as held for sale
+Gains (-) or losses (+) arising from plan settlements
+Past service cost (including plan curtailments)
+Pension payments from plan assets
+22
+58,301
+Changes in consolidated Group
+2020
+Classified as held for sale
+11
+972
+Changes in consolidated Group
+7
+-1
+18
+-99
+Past service cost (including plan curtailments)
+885
+933
+Present value of obligations at January 1
+-8
+Pension payments from company assets
+-2
+Other changes
+Gains (-) or losses (+) arising from plan settlements
+25
+145
+2021
+The change in the present value of the defined benefit obligation is attributable to the following factors:
+297
+€ million
+Consolidated Financial Statements
+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.
+Notes to the Consolidated Financial Statements
+41,376
+-1
+51
+Net liability recognized in the balance sheet at December 31
+Foreign exchange differences from foreign plans
+45,040
+1,922
+Other funds
+183
+190
+Other instruments
+85
+507
+Gains (-) or losses (+) arising from plan settlements
+2,105
+592
+1,315
+Plan assets include €6 million (previous year: €12 million) invested in Volkswagen Group assets and €5 million
+(previous year: €5 million) in Volkswagen Group debt instruments.
+1,344
+48
+360
+408
+The following amounts were recognized in the income statement:
+€ million
+Current service cost
+190
+Net interest on the net defined benefit liability
+Past service cost (including plan curtailments)
+28
+532
+15
+510
+121
+Derivatives
+Net income (-) and expenses (+) recognized in profit or loss
+2
+-27
+-26
+20
+-6
+14
+Equity funds
+5,547
+5,563
+3,640
+15
+3,655
+Bond funds
+6,494
+168
+6,663
+6,011
+133
+6,144
+Real estate funds
+23
+2021
+-222
+2,419
+Foreign exchange differences
+-653
+-56
+-170
+-1,101
+Changes in consolidated Group
+18
+16
+0
+522
+46,217
+556
+9,625
+2,275
+2,347
+2,086
+16,333
+Additions/New provisions
+10,890
+2,707
+121
+1,781
+Utilization
+2020
+7,976
+5,993
+2,215
+352
+459
+-2
+-99
+0
+7
+2,770
+2,583
+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.
+5,260
+Consolidated Financial Statements
+€ million
+Notes to the Consolidated Financial Statements
+301
+Obligations
+arising from
+sales
+Employee
+expenses
+Litigation and
+legal risks
+Miscellaneous
+provisions
+Total
+Balance at Jan. 1, 2020
+26,988
+30. Noncurrent and current other provisions
+170
+2021
+estate
+1,513
+1,162
+6,535
+5,334
+50,506
+51,806
+58,555
+58,301
+2020
+Fair value of plan assets at January 1
+2020
+13,264
+Interest income on plan assets determined using the discount rate
+152
+172
+Income/expenses from plan assets not included in interest income
+808
+677
+Employer contributions to plan assets
+1,003
+929
+Employee contributions to plan assets
+12,478
+8
+2021
+Changes in plan assets are shown in the following table:
+4,393
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+299
+The present value of the defined benefit obligation is attributable as follows to the members of the plan:
+€ million
+Active members with pension entitlements
+Members with vested entitlements who have left the Company
+Pensioners
+2021
+2020
+€ million
+33,394
+3,788
+3,642
+21,372
+18,535
+58,555
+58,301
+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
+Payments due within the next fiscal year
+Payments due between two and five years
+Payments due in more than five years
+36,124
+9
+371
+291
+Quoted prices
+Total
+in active markets
+DEC. 31, 2020
+No quoted prices
+in active markets
+Total
+Cash and cash equivalents
+791
+791
+628
+Equity instruments
+DEC. 31, 2021
+No quoted prices
+in active markets
+279
+264
+Debt instruments
+611
+5
+615
+496
+628
+264
+496
+Direct investments in real
+279
+in active markets
+Quoted prices
+Consolidated Financial Statements
+Pension payments from plan assets
+Gains (+) or losses (-) arising from plan settlements
+Changes in consolidated Group
+Classified as held for sale
+Other changes
+Foreign exchange differences from foreign plans
+Fair value of plan assets at December 31
+2,107
+5
+15
+36
+-496
+291
+-219
+17,285
+13,264
+Other changes in the previous year resulted primarily from the derecognition of plan assets in the context of the
+settlement of a pension plan in the USA funded by external plan assets.
+The investment of the plan assets to cover future pension obligations resulted in income of €960 million
+(previous year: income of €849 million).
+Employer contributions to plan assets are expected to amount to €838 million (previous year: €851 million)
+in the next fiscal year.
+300
+Notes to the Consolidated Financial Statements
+Plan assets are invested in the following asset classes:
+€ million
+170
+19,771
+Cost
+discount rate
+1,737
+240,268
+2,504'
+230,904
+142
+RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS
+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 the carrying amount 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.
+3,312
+1,266
+1,187
+Total
+over five years
+within one
+to five years
+under one year
+6,124
+6,245
+1,005
+1,108
+5,119
+5,137
+Dec. 31, 2020
+Dec. 31, 2021
+CONTRACTUAL MATURITIES
+REMAINING
+Lease liabilities at Dec. 31, 2020
+Lease liabilities at Dec. 31, 2021
+€ million
+MATURITY ANALYSIS OF UNDISCOUNTED LEASE LIABILITIES
+152
+151,497
+Lease liabilities - Total
+2,803
+3,112
+Assets leased under long-term operating leases amounted to €60,313 million at the end of the fiscal year (previous
+year: €51,244 million). While €615 million (previous year: €558 million) is attributable to investment property,
+assets separately reported as lease assets in the balance sheet amount to €59,699 million (previous year:
+€50,686 million). They relate primarily to vehicles in an amount of €59,622 million (previous year: €50,605 million)
+as well as land, land rights and buildings, including buildings on third-party land, in an amount of €68 million
+(previous year: €79 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".
+2.1 OPERATING LEASES
+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.
+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.
+2. LESSOR ACCOUNTING
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+306
+No material cash outflows attributable to variable lease payments and residual value guarantees are expected.
+3,628
+3,867
+270
+270
+8
+2
+3,350
+3,594
+2020
+2021
+Obligations under leases not yet commenced
+Termination options
+Extension options
+Future cash outflows to which the lessee is potentially exposed
+€ million
+The table below shows a summary of potential future cash outflows, that have not been included in the measurement
+of the lease liabilities:
+Leases gave rise to cash outflows totaling €1,952 million (previous year: €1,865 million) in the fiscal year.
+Interest expenses of €177 million (previous year: €216 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 €233 million (previous year: €285 million) in the fiscal year. This figure does not include any expenses
+for short-term leases, which totaled €276 million (previous year: €268 million) in the fiscal year. Variable lease
+expenses not included in the measurement of lease liabilities accounted for €6 million (previous year: €1 million)
+in the fiscal year.
+7,437
+3,138
+7,381
+Financial liabilities - Current
+Financial liabilities - Noncurrent
+€ million
+Additions to cumulative impairment losses
+1,062
+158
+8
+896
+Additions to cumulative depreciation
+6
+1
+5
+Changes in consolidated group
+-43
+-3
+-2
+-37
+Foreign exchange differences
+998
+126
+23
+848
+7,809
+744
+56
+7,009
+394
+97
+1
+297
+-23
+2
+27
+1
+27
+Transfers
+ASSIGNMENT OF LEASE LIABILITIES TO THE RESPECTIVE BALANCE SHEET ITEMS
+The tables below show how the lease liabilities are assigned in the balance sheet and give an overview of their
+contractual maturities:
+305
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Subleases of right-of-use assets generated income of €19 million (previous year: €16 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.
+5,969
+540
+27
+5,401
+Carrying amount at Dec. 31, 2020
+1,840
+204
+28
+The following cash inflows from expected outstanding, non-discounted operating lease payments are expected
+over the coming years:
+1,608
+0
+0
+0
+0
+Reversal of impairment losses
+209
+78
+0
+130
+Disposals
+-1
+-1
+0
+0
+Balance at Dec. 31, 2020
+-1
+DISCLOSURE AS OF DECEMBER 31, 2021
+Lease payments
+15,299
+19,059
+Lease payments
+Total
+from 2026
+2025
+2024
+2023
+2022
+2021
+€ million
+DISCLOSURE AS OF DECEMBER 31, 2020
+54,985
+454
+725
+6,273
+11,802
+15,512
+20,220
+Total
+from 2027
+2026
+2025
+2024
+2023
+2022
+Lease payments
+€ million
+DISCLOSURE AS OF DECEMBER 31, 2021
+12,051
+The following cash inflows from expected outstanding, non-discounted finance lease payments are expected
+over the coming years:
+5,684
+456
+Unwinding of discount/effect of change in
+157,770
+142
+3,545
+21,898
+22,998
+4,719
+687
+Dec. 31, 2020
+Dec. 31, 2021
+Consolidated Financial Statements
+> credit commitments and financial guarantees (off-balance sheet).
+> not allocated to any measurement category; and
+> derivative financial instruments within hedge accounting;
+> financial instruments measured at amortized cost;
+> financial instruments measured at fair value;
+Financial instruments are divided into the following classes at the Volkswagen Group:
+CLASSES OF FINANCIAL INSTRUMENTS
+1 Prior-year figures adjusted.
+of which classified as held for sale
+Financial liabilities measured at amortized cost
+Financial liabilities at fair value through profit or loss
+of which classified as held for sale
+Financial assets at fair value through other comprehensive income (debt instruments)
+Financial assets at fair value through other comprehensive income (equity instruments)
+Financial assets measured at amortized cost
+Financial assets at fair value through profit or loss
+€ million
+CARRYING AMOUNT OF FINANCIAL INSTRUMENTS BY IFRS 9 MEASUREMENT CATEGORY
+The table below shows the carrying amounts of financial instruments by measurement category:
+34. IFRS 7 (Financial Instruments)
+Notes to the Consolidated Financial Statements
+308
+53,162
+612
+52,534
+53,462
+-1,414
+452
+1,220
+3,178
+5,636
+7,893
+Total
+from 2026
+2025
+2024
+2023
+2022
+2021
+Lease payments
+€ million
+DISCLOSURE AS OF DECEMBER 31, 2020
+20,769
+329
+398
+1,243
+3,761
+6,198
+8,840
+Total
+from 2027
+2026
+2025
+2024
+2023
+2022
+BREAKDOWN OF INCOME FROM OPERATING LEASES
+€ million
+Lease income
+Income from variable lease payments
+-1,207
+-3,468
+-3,710
+4,255
+3,393
+53,162
+54,985
+Dec. 31, 2020
+Dec. 31, 2021
+Net investment
+Loss allowance on lease receivables
+Unearned interest income
+Non-discounted lease payments
+Non-guaranteed residual value
+€ million
+€ million
+The following table shows the reconciliation of outstanding lease payments under finance leases to the net
+investment:
+2.2 FINANCE LEASES
+307
+Consolidated Financial Statements
+12,436
+13,566
+7
+5
+12,429
+13,560
+2020
+2021
+18,741
+362
+Total
+Interest income from the net investment in the leases amounted to €2.3 billion (previous year: €2.4 billion) in
+the fiscal year. Furthermore, a selling profit from the finance leases in the amount of €1.1 billion (previous year:
+€0.8 billion) was recognized.
+-24
+Notes to the Consolidated Financial Statements
+102
+4,053
+1,831
+3,035
+23,474
+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.
+14,555
+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.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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. Depending the jurisdiction concerned, they
+also include risk provisions for any non-compliance with legal emissions limits. Their measurement takes into
+account, among other things, the respective sales volume and the legally defined fee or the cost of acquiring
+emission rights from other manufacturers. Advantage has been taken of synergies between individual brands of
+the Volkswagen Group by establishing emission pools where possible.
+Miscellaneous provisions additionally include provisions amounting to €1,527 million (previous year:
+€1,265 million) relating to the insurance business.
+31. Trade payables
+€ million
+302
+Trade payables to
+25,578
+3,389
+16
+-181
+2,272
+278
+599
+1,078
+7,651
+4,227
+6,837
+5,220
+10,685
+49,052
+11,754
+2,784
+26,310
+third parties
+unconsolidated subsidiaries
+joint ventures
+303
+32. IAS 23 (Borrowing Costs)
+Capitalized borrowing costs amounted to €77 million (previous year: €65 million) and related mainly to capitalized
+development costs. An average cost of debt of 1.3% (previous year: 1.5%) was used as a basis for capitalization in
+the Volkswagen Group.
+33. IFRS 16 (Leases)
+1. LESSEE ACCOUNTING
+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:
+Notes to the Consolidated Financial Statements
+PRESENTATION OF AND CHANGES IN RIGHT-OF-USE ASSETS FROM LEASES FOR THE PERIOD
+FROM JANUARY 1 TO DECEMBER 31, 2021
+Cost
+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
+Total
+Balance at Jan. 1, 2021
+€ million
+Other disclosures
+Consolidated Financial Statements
+22,677
+associates
+other investees and investors
+Dec. 31, 2021
+Dec. 31, 2020
+22,964
+22,163
+233
+186
+186
+156
+239
+167
+2
+3
+23,624
+7
+7,009
+-133
+of which noncurrent
+of which current
+12,394
+2,174
+2,037
+6,359
+22,964
+45,652
+of which noncurrent
+4,096
+1,881
+3,107
+22,688
+Balance at Jan. 1, 2021
+25,998
+13,604
+6,270
+9,465
+6,270
+108
+1,358
+17
+-20
+0
+105
+3,918
+Reversals
+223
+586
+1,117
+3,564
+Balance at Dec. 31, 2020
+25,998
+1,637
+3,918
+9,465
+45,652
+1,870
+2,606
+15,009
+Additions/New provisions
+10,997
+2,783
+9,274
+2,120
+20,403
+Unwinding of discount/effect of change in
+discount rate
+Reversals
+Balance at Dec. 31, 2021
+of which current
+4,503
+Utilization
+28
+0
+Foreign exchange differences
+526
+54
+60
+211
+851
+Changes in consolidated Group
+408
+38
+972
+174
+1,592
+Classified as held for sale
+2
+26
+-71
+56
+1,259
+7,809
+12
+1
+13
+Disposals
+255
+3
+Classified as held for sale
+70
+Reversal of impairment losses
+13
+13
+Balance at Dec. 31, 2021
+2,358
+34
+328
+289
+-7
+0
+0
+-3
+4
+Additions to cumulative depreciation
+945
+7
+-1
+156
+Additions to cumulative impairment losses
+9
+1
+10
+Transfers
+-6
+1,108
+2,681
+5,604
+29
+-8
+-221
+Changes in consolidated group
+47
+7
+54
+-3
+Additions
+Disposals
+Balance at Dec. 31, 2020
+Depreciation and impairment
+744
+Balance at Jan. 1, 2020
+1,240
+Transfers
+-210
+Foreign exchange differences
+7,034
+527
+6,159
+304
+Notes to the Consolidated Financial Statements
+PRESENTATION OF AND CHANGES IN RIGHT-OF-USE ASSETS FROM LEASES FOR THE PERIOD
+FROM JANUARY 1 TO DECEMBER 31, 2020
+€ million
+Right of use on
+land, land rights
+and buildings incl.
+buildings on third
+party land
+Consolidated Financial Statements
+Right of use on
+technical
+equipment and
+machinery
+Right of use on
+other equipment,
+operational and
+office equipment
+Total
+Balance at Jan. 1, 2020
+6,253
+44
+738
+7
+Changes in consolidated group
+Carrying amount at Dec. 31, 2021
+3
+-26
+-8
+-2
+-16
+Transfers
+1,390
+155
+10
+1,224
+Additions
+139
+10
+0
+129
+Changes in consolidated group
+203
+6
+54
+2
+196
+Foreign exchange differences
+Classified as held for sale
+31
+16
+32
+Depreciation and impairment
+549
+3
+89
+7,962
+63
+816
+Balance at Dec. 31, 2021
+8,841
+1,608
+28
+204
+49
+1,840
+1
+Foreign exchange differences
+Balance at Jan. 1, 2021
+2
+641
+Disposals
+21,146
+1,512
+543
+279
+279
+137
+0
+40
+177
+Level 3
+Level 2
+Level 1
+Dec. 31, 2020
+104
+905
+869'
+199
+529
+1,009
+728
+89
+784
+21,060
+7271
+1 Prior-year figures adjusted.
+160
+2,242
+2,402
+26
+26
+86
+52
+Other financial assets
+Current assets
+Trade receivables
+Financial services receivables
+Other financial assets
+52
+22,406
+Marketable securities
+Noncurrent liabilities
+729
+Other financial liabilities
+1,271'
+Current liabilities
+Other financial liabilities
+1,233'
+22,495
+1,353
+1,733
+10,590
+301
+340
+1 Prior-year figures adjusted.
+The carrying amount of lease receivables was €53.8 billion (previous year: €52.9 billion) and their fair value (fair
+value hierarchy level 3) was €54.8 billion (previous year adjusted: €54.1 billion).
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+311
+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:
+FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE BY LEVEL
+812'
+€ million
+364
+Other equity investments
+Financial services receivables
+Other financial assets
+Current assets
+Trade receivables
+Financial services receivables
+Other financial assets
+Marketable securities
+Noncurrent liabilities
+Noncurrent assets
+263
+8,545
+38
+Tax payables
+1,996
+26
+26
+8
+8
+1,477
+2,830
+290
+290
+181
+8,545
+38
+0
+760
+Level 3
+Level 2
+Level 1
+Dec. 31, 2021
+Other equity investments
+Noncurrent assets
+€ million
+Other financial liabilities
+Current liabilities
+Other financial liabilities
+579
+Financial services receivables
+142
+Notes to the Consolidated Financial Statements
+1,233'
+Level 3
+Level 2
+Level 1
+Dec. 31, 2020
+Fair value of financial assets measured at amortized cost
+Cash, cash equivalents and time deposits
+Marketable securities
+Tax receivables
+Other financial assets
+89,705
+Trade receivables
+Fair value of financial assets measured at amortized cost
+€ million
+1,893
+190,666
+52,617
+245,177
+Fair value of financial liabilities measured at amortized cost
+142
+Liabilities associated with assets held for sale
+27
+Financial services receivables
+27
+22,677
+161,016
+22,677
+202,925
+10,862
+38
+89,705
+16,191
+14,135
+466
+16,191
+4,834
+8,834
+9
+9
+15
+15
+41,909
+691
+33,909
+188
+153,965
+34,203
+21,223
+98,540
+Fair value of financial liabilities measured at amortized cost
+Trade payables
+Financial liabilities
+Other financial liabilities
+Tax payables
+33,721
+312
+Tax payables
+11,375
+996
+15,077
+15,513
+15,513
+88,530
+88,530
+Level 3
+Level 2
+Level 1
+Dec. 31, 2021
+5,126
+Consolidated Financial Statements
+Assets held for sale
+Cash, cash equivalents and time deposits
+Marketable securities
+Tax receivables
+Other financial assets
+Trade receivables
+Financial services receivables
+Fair value of financial assets measured at amortized cost
+€ million
+FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT AMORTIZED COST BY LEVEL
+Fair value of financial assets measured at amortized cost
+316
+8,955
+9
+858
+12,549
+Other financial liabilities
+1,577
+23,624
+155,499
+51,759
+208,835
+Financial liabilities
+23,624
+Trade payables
+9
+Fair value of financial liabilities measured at amortized cost
+21,385
+40,162
+159,032
+57
+85
+142
+680
+39,043
+37
+37
+97,485
+Other financial liabilities
+532
+88,648
+39,723
+142
+Assets held for sale
+time deposits
+Cash, cash equivalents and
+22,532
+37
+37
+22,495
+Marketable securities
+1,618
+39,723
+142
+1,608
+9
+Tax receivables
+12,584
+543
+10,046
+10,046
+1,996
+Other financial assets
+56,498
+19,268
+9
+37,204
+39,723
+Noncurrent liabilities
+23,624
+23,624
+78,584
+1,108
+77,476
+77,476
+assets held for sale
+Liabilities associated with
+Tax payables
+Other financial liabilities
+674
+Trade payables
+Current liabilities
+131,618
+4,466
+1,320
+5,137
+131,359
+2,437
+2,419
+728
+Other financial liabilities
+126,481
+Financial liabilities
+Financial liabilities
+23,624
+37,204
+Financial services receivables
+12,531
+12,531
+Equity-accounted investments
+Noncurrent assets
+Carrying amount
+Carrying amount
+Fair value
+Carrying amount Carrying amount
+DEC. 31, 2021
+BALANCE
+SHEET ITEM AT
+Other equity investments
+NOT
+ALLOCATED
+TO A
+MEASUREMENT
+CATEGORY
+WITHIN HEDGE
+MEASURED AT
+AMORTIZED COST
+DERIVATIVE
+FINANCIAL
+INSTRUMENTS
+AT FAIR
+VALUE
+MEASURED
+€ million
+RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2021
+309
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ACCOUNTING
+26
+760
+9,851
+38
+15,521
+15,513
+15,513
+8
+Trade receivables
+Current assets
+635
+635
+Tax receivables
+9,156
+2,240
+1,377
+4,950
+2,830
+Other financial assets
+84,954
+34,519
+51,326
+50,146
+290
+Financial services receivables
+3,000
+5,031
+22,677
+1,009
+10,112
+Marketable securities
+1,186
+1,177
+9
+9
+Tax receivables
+13,234
+917
+9,915
+9,915
+21,146
+2,402
+58,006
+18,506
+39,474
+39,474
+26
+Financial services receivables
+16,243
+16,191
+16,191
+52
+Other financial assets
+Trade receivables
+15
+21,162
+1,005
+87,643
+22,677
+87,643
+22,677
+Trade payables
+Financial liabilities
+Current liabilities
+4,257
+665
+114,809
+5,119
+15
+115,282
+2,317
+1,271'
+Other financial liabilities
+109,690
+Financial liabilities
+Noncurrent liabilities
+33,909
+33,909
+33,909
+time deposits
+Cash, cash equivalents and
+2,322
+10,112
+Current assets
+376
+NOT
+ALLOCATED
+ΤΟ Α
+MEASUREMENT
+CATEGORY
+ACCOUNTING
+WITHIN HEDGE
+MEASURED AT
+AMORTIZED COST
+DERIVATIVE
+FINANCIAL
+INSTRUMENTS
+AT FAIR
+VALUE
+MEASURED
+€ million
+RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2020
+Consolidated Financial Statements
+BALANCE
+Notes to the Consolidated Financial Statements
+238
+96
+142
+142
+614
+588
+27
+27
+13,002
+1,880
+310
+376
+SHEET ITEM AT
+DEC. 31, 2020
+Fair value
+Tax receivables
+7,834
+2,217
+4,220
+4,105
+1,512
+Other financial assets
+82,565
+34,408
+50,231
+Carrying amount Carrying amount
+47,879
+1,865
+1,688
+177
+Other equity investments
+Financial services receivables
+10,080
+10,080
+Equity-accounted investments
+Noncurrent assets
+Carrying amount
+Carrying amount
+279
+320
+39,723
+236,502
+Dec. 31, 2020
+Net amount at
+Collateral
+received
+Financial
+instruments
+Net amounts of
+financial assets
+presented in the
+balance sheet
+set off in the
+balance sheet
+financial assets
+Derivatives
+recognized
+Gross amounts of
+recognized
+AMOUNTS THAT ARE NOT SET
+OFF IN THE BALANCE SHEET
+€ million
+17,191
+0
+17,191
+39,723
+Gross amounts of financial liabilities
+6,216
+-165
+Financial services receivables
+21,162
+16,243
+0
+16,243
+21,162
+21,162
+Marketable securities
+-10
+16,253
+Trade receivables
+140,473
+-98
+4,246
+-35
+-1,770
+6,051
+140,571
+-614
+141,185
+39,723
+Cash, cash equivalents and
+17,191
+39,723
+5,408
+Derivatives
+Dec. 31, 2021
+Net amount at
+Collateral
+received
+Financial
+instruments
+Net amounts of
+financial assets
+presented in the
+balance sheet
+-89
+Gross amounts of
+recognized
+financial liabilities
+set off in the
+balance sheet
+Gross amounts of
+recognized
+OFF IN THE BALANCE SHEET
+AMOUNTS THAT ARE NOT SET
+€ million
+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.
+OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES
+Consolidated Financial Statements
+financial assets
+Financial services receivables
+142,057
+-605
+time deposits
+Cash, cash equivalents and
+22,532
+22,532
+22,532
+Marketable securities
+15,521
+0
+15,521
+-31
+15,552
+Trade receivables
+141,350
+2,117
+-7
+-102
+-3,195
+5,319
+141,452
+Other financial assets
+Notes to the Consolidated Financial Statements
+time deposits
+Other financial assets
+Net amounts of
+financial liabilities
+presented in the
+balance sheet
+AMOUNTS THAT ARE NOT SET
+OFF IN THE BALANCE SHEET
+Gross amounts of
+recognized
+financial assets
+set off in the
+balance sheet
+financial liabilities
+Gross amounts of
+recognized
+Other financial liabilities
+Other financial liabilities include liabilities from tax allocations of €27 million (previous year: €38 million).
+Financial
+instruments
+318
+Consolidated Financial Statements
+ASSET-BACKED SECURITIES TRANSACTIONS
+Asset-backed securities transactions with financial assets amounting to €33.0 billion (previous year: €30.6 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 €38.2 billion (previous year: €34.5 billion). Collateral of
+€55.8 billion (previous year: €48.9 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.
+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 10% 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, 2021, the fair value of the assigned receivables still recognized in the balance sheet was
+€38.5 billion (previous year: €35.4 billion). The fair value of the related liabilities was €32.6 billion (previous year:
+€30.6 billion) at that reporting date.
+The Volkswagen Bank GmbH Group is 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.
+Trade payables
+Notes to the Consolidated Financial Statements
+Collateral
+pledged
+Net amount at
+Dec. 31, 2020
+3,417
+Fair value of financial liabilities measured at amortized cost
+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.
+11,476
+22,677
+0
+201,502
+-1,955
+1,638
+-2
+-1,769
+3,409
+203,457
+22,677
+11,476
+-771
+12,247
+-10
+22,687
+203,457
+-8
+Financial liabilities
+33,909
+Derivatives
+13,073
+Financial
+instruments
+AMOUNTS THAT ARE NOT SET
+OFF IN THE BALANCE SHEET
+317
+Notes to the Consolidated Financial Statements
+Net amounts of
+financial liabilities
+presented in the
+balance sheet
+recognized
+financial assets
+set off in the
+balance sheet
+Gross amounts of
+Collateral
+pledged
+financial liabilities
+Consolidated Financial Statements
+Other financial assets include receivables from tax allocations of €9 million (previous year: €9 million).
+15,203
+33,909
+0
+33,909
+15,203
+15,203
+Gross amounts of
+recognized
+Net amount at
+Dec. 31, 2021
+Derivatives
+23,623
+0
+23,623
+13,073
+-692
+13,765
+Other financial liabilities
+-31
+23,654
+Trade payables
+1,208
+208,446
+-19
+-1,756
+-3,195
+4,422
+210,202
+210,202
+-3
+4,425
+Financial liabilities
+€ million
+316
+€ million
+If the corresponding vehicle price used in the vehicle financing programs had been 10% higher as of December 31,
+2021, earnings after tax would have been €8 million (previous year: €2 million) higher. If the corresponding
+vehicle prices used in the vehicle financing programs had been 10% lower as of December 31, 2021, earnings after
+tax would have been €8 million (previous year: €2 million) lower.
+€ million
+CHANGES IN BALANCE SHEET ITEMS MEASURED AT FAIR VALUE BASED ON LEVEL 3
+The table below provides a summary of changes in level 3 balance sheet items measured at fair value:
+Notes to the Consolidated Financial Statements
+314
+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 and receivables
+from vehicle financing programs and other equity investments are also reported in Level 3. Equity instruments are
+measured primarily using the relevant business plans and entity-specific discount rates. 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.
+102
+Balance at Jan. 1, 2021
+710
+665
+665
+917
+917
+2,217
+2,217
+Level 3
+812
+Foreign exchange differences
+Changes in consolidated Group
+Total comprehensive income
+-367
+1,114
+-297
+12
+908
+48
+1,383
+Financial liabilities
+measured at fair value
+Financial assets
+measured at fair value
+Consolidated Financial Statements
+Balance at Dec. 31, 2021
+Transfers into Level 2
+Transfers into Level 1
+Sales and settlements
+Additions (purchases)
+recognized in other comprehensive income
+recognized in profit loss
+Level 2
+802
+Level 1
+1 Prior-year figures adjusted.
+Other financial assets
+1,377
+1,377
+Level 3
+Level 2
+Level 1
+Dec. 31, 2021
+543
+313
+Current assets
+Other financial assets
+Noncurrent assets
+€ million
+DERIVATIVE FINANCIAL INSTRUMENTS WITHIN HEDGE ACCOUNTING BY LEVEL
+Consolidated Financial Statements
+320
+Notes to the Consolidated Financial Statements
+543
+Noncurrent liabilities
+Other financial liabilities
+Current liabilities
+Other financial liabilities¹
+Noncurrent liabilities
+Other financial assets
+Current assets
+Other financial assets
+Noncurrent assets
+€ million
+1,880
+42,600
+If the result of operations of equity investments measured at fair value had been 10% better as of December 31,
+2021, equity would have been €6.2 million (previous year: €5.8 million) higher, and earnings after tax would have
+been €8.7 million (previous year: €2.1 million) higher. If the result of operations of equity investments measured
+at fair value had been 10% worse, equity would have been €6.2 million (previous year: €5.8 million) lower, and
+earnings after tax would have been €8.7 million (previous year: €2.1 million) lower.
+193,582
+1,880
+Other financial liabilities
+Current liabilities
+1,320
+1,320
+Dec. 31, 2020
+-268
+Other financial liabilities¹
+-99
+0
+Financial result
+of which attributable to assets/liabilities
+held at the reporting date
+7
+0
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+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. The transfer out of Level 3 into Level 1 relates to the equity investment in TuSimple
+Holdings Inc., San Diego, California/USA, for which quoted prices are now available following its IPO. In addition,
+the "financial liabilities" item contains liabilities from notes measured at amortized cost in an amount of
+€1,915 million, which were transferred out of Level 2 into Level 1 because the market can be considered active
+due to increased liquidity.
+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,
+2021, earnings after tax would have been €237 million (previous year: €263 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, 2021 had been 10% higher, earnings after tax would have
+been €6 million (previous year: €4 million) higher. If the assumed enterprise values as of December 31, 2021 had
+been 10% lower, earnings after tax would have been €6 million (previous year: €4 million) lower.
+Residual value risks result from hedging agreements with dealerships under which earnings effects caused
+by market-related fluctuations in residual values that arise from buy-back 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,
+2021, earnings after tax would have been €416 million (previous year: €382 million) higher. If the prices of the
+used cars covered by the residual value protection model had been 10% lower as of December 31, 2021, earnings
+after tax would have been €468 million (previous year: €419 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, 2021, earnings after tax would have been €3 million (previous year: €2 million) lower.
+If the risk-adjusted interest rates as of December 31, 2021 had been 100 basis points lower, earnings after tax
+would have been €3 million (previous year: €2 million) higher.
+425
+18
+551
+-370
+of which attributable to assets/liabilities
+held at the reporting date
+425
+Total gains or losses recognized in profit or loss
+312
+908
+-452
+Net other operating expense/income
+1,383
+-77
+-100
+-323
+-203
+312
+99
+8
+452
+407
+-452
+313
+433
+315
+-9
+49
+290
+296
+of which attributable to assets/liabilities
+held at the reporting date
+268
+753
+Net other operating expense/income
+268
+Financial result
+802
+66
+2,119
+-23
+-255
+-333
+-227
+-157
+616
+Total gains or losses recognized in profit or loss
+of which attributable to assets/liabilities
+held at the reporting date
+303
+Balance at Jan. 1, 2020
+€ million
+765
+-39
+Financial liabilities
+measured at fair value
+Financial assets
+measured at fair value
+-6
+Balance at Dec. 31, 2020
+Transfers into Level 2
+913
+Additions (purchases)
+Foreign exchange differences
+Changes in consolidated Group
+Sales and settlements
+Total comprehensive income
+recognized in other comprehensive income
+recognized in profit loss
+€ million
+828
+675
+1,212
+492
+-1
+49
+Carrying amount at Dec. 31, 2021
+3,257
+326
+Notes to the Consolidated Financial Statements
+CHANGES IN GROSS CARRYING AMOUNTS OF FINANCIAL ASSETS MEASURED AT AMORTIZED COST
+Consolidated Financial Statements
+Stage 1
+121,425
+Stage 3
+Simplified
+approach
+-4,123
+Stage 4
+Total
+Carrying amount at Jan. 1, 2020
+11,728
+Foreign exchange differences
+1,561
+18,208
+490
+153,411
+-677
+-1
+Stage 2
+0
+Total
+-43
+75
+23
+0
+0
+99
+Changes in consolidated group
+1,087
+1
+12
+1,100
+Changes
+7,383
+3,526
+298
+213
+11,420
+Modifications
+Transfers to
+Stage 1
+Stage 2
+Stage 3
+Carrying amount at Dec. 31, 2021
+115
+-143
+-90
+-115
+Foreign exchange differences
+12,119
+174
+281
+2
+0
+-23
+-1
+-21
+Changes to models or risk parameters
+-306
+Carrying amount at Dec. 31, 2020
+929
+786
+825
+814
+Classified as held for sale
+87
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+327
+CHANGES IN DEFAULT RISK POSITIONS OF FINANCIAL GUARANTEES AND CREDIT COMMITMENTS
+€ million
+Stage 1
+Stage 2
+Stage 3
+Stage 4
+Carrying amount at Jan. 1, 2021
+9,016
+2,648
+3,440
+-667
+893
+-5,566
+-2
+13
+Changes in consolidated group
+-189
+-5
+-29
+-89
+-32
+-33
+Foreign exchange differences
+3,336
+94
+94
+760
+677
+913
+Carrying amount at Jan. 1, 2020
+Total
+Stage 4
+24
+2
+37
+Newly extended/purchased financial assets (additions)
+0
+320
+-126
+Stage 2
+-14
+-61
+22
+Stage 1
+Transfers to
+Simplified
+approach
+134
+16
+-35
+69
+79
+Other changes within a stage
+685
+18
+252
+415
+5
+-9
+Stage 3
+Stage 1
+-1
+0
+-3
+1
+1
+Modifications
+4,471
+-24
+-677
+-709
+6,640
+-758
+Changes
+2,596
+72
+7
+3
+2,514
+Changes in consolidated group
+Transfers to
+Stage 1
+Stage 2
+Stage 3
+€ million
+CHANGES IN LOSS ALLOWANCE FOR FINANCIAL ASSETS MEASURED AT AMORTIZED COST
+154,912
+458
+16,935
+1,600
+22,253
+0
+997
+Stage 2
+-417
+0
+-146
+7,261
+-7,115
+0
+-16
+-2,286
+2,302
+Carrying amount at Dec. 31, 2020
+-580
+113,665
+0
+281
+0
+-5
+-1
+6
+0
+9,016
+2,648
+-42
+174
+12,119
+0
+CHANGES IN LOSS ALLOWANCE FOR FINANCIAL GUARANTEES AND CREDIT COMMITMENTS
+Stage 1
+Stage 2
+Stage 3
+Stage 4
+Total
+Carrying amount at Jan. 1, 2020
+17
+2
+0
+€ million
+0
+98
+-98
+0
+-80
+Changes in consolidated group
+93
+93
+Changes
+-455
+855
+116
+66
+582
+Modifications
+Transfers to
+Stage 1
+Stage 2
+Stage 3
+Carrying amount at Dec. 31, 2020
+30
+-30
+0
+0
+0
+0
+18
+-1
+1
+1
+Stage 3
+0
+0
+0
+0
+Financial instruments derecognized during the period (disposals)
+Utilization
+-4
+0
+-1
+-1
+Changes to models or risk parameters
+0
+0
+0
+Carrying amount at Dec. 31, 2020
+19
+3
+0
+-5
+Stage 2
+0
+0
+0
+0
+0
+-1
+Changes in consolidated group
+0
+0
+Newly extended/purchased financial assets (additions)
+8
+0
+0
+0
+8
+Other changes within a stage
+1
+1
+0
+2
+Transfers to
+Stage 1
+0
+Foreign exchange differences
+-2
+-78
+Foreign exchange differences
+0
+0
+0
+0
+Changes in consolidated group
+6
+0
+4
+10
+0
+Newly extended/purchased financial assets (additions)
+0
+65
+Other changes within a stage
+-38
+18
+19
+3
+2
+Transfers to
+65
+Foreign exchange differences
+22
+0
+0
+-1
+-3
+4
+0
+17,533
+6,223
+582
+400
+24,738
+CHANGES IN LOSS ALLOWANCE FOR FINANCIAL GUARANTEES AND CREDIT COMMITMENTS
+€ million
+Stage 1
+Stage 2
+Stage 3
+Stage 4
+Total
+Carrying amount at Jan. 1, 2021
+19
+3
+0
+Stage 1
+0
+0
+0
+43
+20
+20
+7
+90
+328
+Notes to the Consolidated Financial Statements
+CHANGES IN DEFAULT RISK POSITIONS OF FINANCIAL GUARANTEES AND CREDIT COMMITMENTS
+€ million
+Consolidated Financial Statements
+Stage 1
+Stage 2
+Stage 3
+Stage 4
+Total
+Carrying amount at Jan. 1, 2020
+9,529
+1,728
+160
+108
+11,525
+Carrying amount at Dec. 31, 2021
+143
+0
+0
+Stage 2
+-1
+1
+0
+0
+Stage 3
+0
+2
+1
+Financial instruments derecognized during the period (disposals)
+Utilization
+-6
+-1
+0
+0
+-8
+-1
+-1
+-2
+Changes to models or risk parameters
+0
+0
+0
+Stage 3
+1,522
+-88
+3,685
+Foreign exchange differences
+154,912
+458
+16,935
+1,600
+22,253
+113,665
+Carrying amount at Jan. 1, 2021
+Total
+Stage 4
+Simplified
+approach
+Stage 3
+Stage 2
+Stage 1
+€ million
+CHANGES IN GROSS CARRYING AMOUNTS OF FINANCIAL ASSETS MEASURED AT AMORTIZED COST
+The tables below show the reconciliation of the loss allowance for various financial assets and financial guarantees
+and credit commitments:
+325
+359
+28
+342
+1
+2,788
+369
+1
+-3,155
+Modifications
+-657
+-64
+-1,657
+-1,041
+Notes to the Consolidated Financial Statements
+758
+Changes
+2,631
+10
+1,313
+0
+7
+1,302
+Changes in consolidated group
+4,415
+1,347
+Consolidated Financial Statements
+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.
+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.
+7,843
+201,387
+in financing activities
+Financial assets and liabilities
+21
+-202
+132
+172
+-81
+-6,680
+liabilities
+「
+203,457
+825
+306
+-6,812
+7,670
+104,707
+6,124
+1,170
+39
+Other financial assets and
+-9
+306
+203,478
+The Volkswagen Group consistently uses the expected credit loss model of IFRS 9 for all financial assets and other
+risk exposures.
+LOSS ALLOWANCE
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+324
+For China, credit and default risk exposures accounted for 17.0% at the end of 2021, as against 19.7% at the
+end of 2020. There were no other concentrations of credit and default risk exposures in individual countries.
+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 6.9% at the end of 2021 compared with 6.6% at the end of 2020. 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. This analysis excludes the items of Chinese
+companies in which Volkswagen holds an interest of 50% or less.
+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 default risk is determined by the guarantee amount. The corresponding
+amounts are presented in the Liquidity risk section.
+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 €1.1 billion (previous year: €1.2 billion). Collateral of €203 million
+(previous year: €237 million) has been accepted for assets measured at fair value through profit or loss.
+622
+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 irrevo-
+cable 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 more information, see the section on financial risks in the Report on Risks and Opportunities of the group
+management report.
+Group Treasury is responsible for operational risk management and the control of risks from financial
+instruments. The Group Board of Management Committee for Risk Management 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 MAN Energy Solutions, Porsche Holding Salzburg
+and TRATON GROUP subgroups and of the Financial Services Division are included in Group Treasury's operational risk
+management and control for risks relating to financial instruments and have their own risk management
+structures.
+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".
+1. HEDGING GUIDELINES AND FINANCIAL RISK MANAGEMENT PRINCIPLES
+323
+Notes to the Consolidated Financial Statements
+36. Financial risk management and financial instruments
+Consolidated Financial Statements
+1 Other changes in lease liabilities largely contain non-cash additions of lease liabilities.
+2. CREDIT AND DEFAULT RISK
+-18
+-280
+Utilization
+1,978
+19,627
+404
+161,177
+CHANGES IN LOSS ALLOWANCE FOR FINANCIAL ASSETS MEASURED AT AMORTIZED COST
+€ million
+Stage 1
+Stage 2
+Stage 3
+23,918
+Simplified
+approach
+Total
+Carrying amount at Jan. 1, 2021
+929
+786
+825
+814
+87
+3,440
+Foreign exchange differences
+Stage 4
+22
+115,250
+-95
+0
+2
+Transfers to
+Stage 1
+Stage 2
+Stage 3
+Classified as held for sale
+Carrying amount at Dec. 31, 2021
+3,365
+-126
+-3,348
+0
+-4,461
+4,528
+-67
+0
+-467
+-638
+0
+-31
+-17
+-195
+19
+4
+Stage 2
+-102
+250
+-20
+Stage 3
+-139
+-69
+476
+-85
+-7
+128
+Financial instruments derecognized during the period
+(disposals)
+-201
+-176
+-267
+-178
+-18
+%
+-840
+268
+20
+-100
+Stage 1
+0
+66
+Changes in consolidated group
+1
+0
+0
+0
+Newly extended/purchased financial assets (additions)
+425
+22
+183
+608
+Other changes within a stage
+-107
+-34
+488
+-311
+-13
+23
+Transfers to
+0
+-1,100
+6,210
+201,468
+44
+3,540
+7,099
+2020
+2021
+Gains arising from the derecognition of financial assets measured at amortized cost
+Losses arising from the derecognition of financial assets measured at amortized cost
+€ million
+GAINS AND LOSSES ON THE DISPOSAL OF FINANCIAL ASSETS MEASURED AT AMORTIZED COST
+Interest expenses
+Interest income
+6,982
+3,707
+fair value through other comprehensive income
+Interest expenses
+Interest income
+Financial assets and liabilities measured at amortized cost
+€ million
+TOTAL INTEREST INCOME AND EXPENSES ATTRIBUTABLE TO FINANCIAL INSTRUMENTS NOT MEASURED
+AT FAIR VALUE THROUGH PROFIT OR LOSS
+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:
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+320
+Financial assets (debt instruments) and liabilities measured at
+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.
+5
+0
+Cash, cash equivalents and time deposits as reported in the balance sheet
+Cash and cash equivalents held for sale
+€ million
+Dividends amounting to €2,419 million (previous year: €2,419 million) were paid to Volkswagen AG shareholders.
+In the fiscal year, cash flows from operating activities include interest received amounting to €7,188 million
+(previous year: €7,192 million) and interest paid amounting to €2,471 million (previous year: €2,677 million).
+Cash flows from operating activities also include dividend payments (net of withholding tax) received from joint
+ventures and associates of €2,960 million (previous year: €3,098 million).
+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.
+Financing activities include outflows of funds from dividend payments and the redemption of bonds, inflows
+from capital increases and the 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.
+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.
+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.
+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.
+4
+35. Cash flow statement
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+In the fiscal year, €1 million (previous year: €2 million) was recognized as an expense and €27 million (previous
+year: €29 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.
+-717
+-1,527
+810
+583
+-1,003
+-420
+2020
+2021
+321
+Time deposits
+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.
+1,970
+23
+9
+Changes to models or risk parameters
+-311
+-21
+-33
+-257
+Utilization
+-647
+1
+-6
+-170
+-121
+-197
+(disposals)
+Financial instruments derecognized during the period
+258
+152
+-53
+513
+-154
+Net gains and losses in the category "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.
+1
+36
+5,740
+-3,242
+-3,247
+4
+1
+2,899
+5,889
+2,309
+3,097
+2
+2020
+Financial assets at fair value through other comprehensive income (debt instruments)
+Financial liabilities measured at amortized cost
+Financial assets measured at amortized cost
+Financial instruments at fair value through profit or loss
+€ million
+NET GAINS OR LOSSES FROM FINANCIAL INSTRUMENTS BY IFRS 9 MEASUREMENT CATEGORY
+ADDITIONAL INCOME STATEMENT DISCLOSURES IN ACCORDANCE WITH IFRS 7 (FINANCIAL INSTRUMENTS)
+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:
+319
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+2021
+-167
+Cash and cash equivalents as reported in the cash flow statement
+Dec. 31, 2020
+2
+3,859
+4,476
+€ million
+1 Other changes in lease liabilities largely contain non-cash additions of lease liabilities.
+-3,071
+203,478
+-21
+-69
+1,453
+0
+21
+105,929
+6,245
+210,213
+2
+3,859
+4,475
+-3,097
+203,457
+1,087
+13
+26
+132
+210,192
+Jan. 1, 2020
+267
+-5,638
+3,404
+106,630
+92,626
+-389
+-979
+5,366
+88,629
+NON-CASH CHANGES
+Total third-party borrowings
+borrowings
+Other total third-party
+Bonds
+Dec. 31, 2020
+Other changes
+Group
+Changes in
+consolidated
+Foreign
+exchange
+differences
+Cash-effective
+changes
+Finance lease liabilities'
+Dec. 31, 2021
+162
+6,124
+in financing activities
+Financial assets and liabilities
+Other financial assets and
+liabilities
+Total third-party borrowings
+Finance lease liabilities¹
+Other total third-party
+borrowings
+Bonds
+€ million
+The following table shows the classification of changes in financial liabilities into cash and non-cash transactions:
+NON-CASH CHANGES
+Consolidated Financial Statements
+322
+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.
+33,432
+39,123
+-477
+-686
+85
+33,909
+39,723
+Notes to the Consolidated Financial Statements
+-1,246
+Foreign
+exchange
+|
+306
+-11
+1,784
+3,074
+-3,954
+104,707
+98,038
+129
+Cash-effective
+1,942
+2,102
+92,626
+Dec. 31, 2021
+Other changes
+Classified as
+held for sale
+Changes in
+consolidated
+Group
+differences
+changes
+Jan. 1, 2021
+1,239
+1,105
+22
+0
+€ million
+Stage 4
+Simplified
+approach
+Stage 3
+Stage 2
+Stage 1
+€ million
+Credit risk rating grade 1
+GROSS CARRYING AMOUNTS OF FINANCIAL ASSETS BY RATING CATEGORY AS OF DECEMBER 31, 2020
+73,483
+2,009
+25,849
+119,692
+232
+1,024
+2,009
+384
+(receivables with no credit risk - standard loans)
+112,446
+10,109
+117,725
+Total
+288
+1,157
+2,709
+(cancelled receivables - non-performing loans)
+Credit risk rating grade 3
+64
+2,877
+12,926
+5,278
+(receivables with credit risk – intensified loan management)
+Credit risk rating grade 2
+106
+65,040
+Total
+(cancelled receivables - non-performing loans)
+Credit risk rating grade 3
+47
+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 as well as 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.
+RATING CATEGORIES
+In the fiscal year under review, contractually revocable credit commitments were reclassified as they must, in
+substance, be considered irrevocable credit commitments. An adjustment of €8.3 billion was made to the prior-
+year figures.
+220,053
+240,781
+52,914
+12,097
+24,648
+151,497
+157,628
+3,545
+4,719
+Dec. 31, 2020
+Dec. 31, 2021
+331
+The table below presents the gross carrying amounts of financial assets by rating category:
+23,035
+GROSS CARRYING AMOUNTS OF FINANCIAL ASSETS BY RATING CATEGORY AS OF DECEMBER 31, 2021
+Stage 1
+2,121
+4,549
+2,005
+(receivables with credit risk - intensified loan management)
+Credit risk rating grade 2
+105
+70,337
+21,300
+117,687
+(receivables with no credit risk - standard loans)
+Credit risk rating grade 1
+Stage 4
+Simplified
+approach
+Stage 3
+Stage 2
+€ million
+2,709
+69,074
+458
+174
+281
+2,648
+8,935
+45
+281
+Total
+(cancelled receivables - non-performing loans)
+Credit risk rating grade 3
+10
+557
+105
+(receivables with credit risk - intensified loan management)
+Credit risk rating grade 2
+118
+1 Prior-year figures adjusted.
+Collateral that was accepted for financial assets in the current fiscal year was recognized in the balance sheet in
+the amount of €120 million (previous year: €159 million). This mainly relates to vehicles.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+2021
+more than
+five years
+within one
+to five years
+year
+€ million
+up to one
+CONTRACTUAL MATURITIES
+2,091
+REMAINING
+REMAINING
+MATURITY ANALYSIS OF UNDISCOUNTED CASH FLOWS FROM FINANCIAL INSTRUMENTS
+The following overview shows the contractual undiscounted cash flows from financial instruments:
+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.
+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 €28.4 billion
+as of December 31, 2021 (previous year: €27.9 billion), of which €1.6 billion (previous year: €2.3 billion) was
+drawn down.
+3. LIQUIDITY RISK
+333
+CONTRACTUAL MATURITIES
+Notes to the Consolidated Financial Statements
+8,830
+Credit risk rating grade 1
+247
+4,923
+17,337
+(receivables with no credit risk - standard loans)
+Credit risk rating grade 1
+Stage 4
+Stage 3
+Stage 2
+Stage 1
+€ million
+DEFAULT RISK FOR FINANCIAL GUARANTEES AND CREDIT COMMITMENTS AS OF DECEMBER 31, 2021
+Furthermore, the default risk exposure for financial guarantees and credit commitments is presented below:
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+332
+Credit risk rating grade 2
+(receivables with credit risk - intensified loan management)
+196
+1,301
+Stage 4
+Stage 3
+Stage 2
+Stage 1
+€ million
+DEFAULT RISK FOR FINANCIAL GUARANTEES AND CREDIT COMMITMENTS AS OF DECEMBER 31, 2020¹
+400
+(receivables with no credit risk - standard loans)
+582
+17,533
+129
+582
+Total
+(cancelled receivables - non-performing loans)
+Credit risk rating grade 3
+23
+6,223
+1 Prior-year figures adjusted.
+Not allocated to a measurement category
+Total
+Financial guarantees and credit commitments
+51
+-11
+-107
+-105
+-314
+-511
+225
+6
+377
+386
+0
+-29
+1,312
+1,516
+17
+2020
+1,297
+2021
+1,516
+Stage 1
+60
+1,105
+Changes
+Changes in consolidated group
+13
+Foreign exchange differences
+785
+2,763
+Carrying amount at Jan. 1, 2021
+Total
+No loss
+allowance
+Stage 4
+Simplified
+approach
+Stage 3
+Stage 2
+€ million
+SIMPLIFIED APPROACH
+54,817
+-4
+Foreign exchange differences
+Carrying amount at Jan. 1
+€ million
+CHANGES IN LOSS ALLOWANCE FOR LEASE RECEIVABLES AND CONTRACT ASSETS
+Carrying amount at Dec. 31
+Modifications
+Changes
+Changes in consolidated group
+Foreign exchange differences
+Carrying amount at Jan. 1
+€ million
+CHANGES IN GROSS CARRYING AMOUNTS OF LEASE RECEIVABLES AND CONTRACT ASSETS
+329
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Changes in consolidated group
+Newly extended/purchased financial assets (additions)
+Other changes
+Financial instruments derecognized during the period (disposals)
+-2
+55,515
+650
+-633
+2
+162
+-1,397
+1,170
+22,038
+55,566
+2020
+2021
+SIMPLIFIED APPROACH
+CHANGES IN GROSS CARRYING AMOUNTS OF ASSETS MEASURED AT FAIR VALUE
+Carrying amount at Dec. 31
+Changes to models or risk parameters
+Utilization
+54,817
+up to one
+year
+25,585
+141
+-442
+-366
+366
+Stage 2
+Stage 1
+Transfers to
+Modifications
+5,713
+5,307
+104
+104
+-135
+19,904
+16,762
+-135
+-855
+442
+1,261
+0
+Stage 3
+Financial assets measured at fair value
+Financial assets measured at amortized cost
+MAXIMUM CREDIT RISK BY CLASS
+Consolidated Financial Statements
+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:
+MAXIMUM CREDIT RISK
+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 €31 million (previous year: €81 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.
+There were contract modifications to financial assets in the reporting period that did not lead to the derecognition
+of the asset. These were primarily attributable to credit ratings and relate to financial assets for which loss
+allowances were measured in the amount of the expected 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 €225 million (previous year:
+€493 million). In the reporting period, contract modifications resulted in net income/net expenses of €3.0 mil-
+lion (previous year: €6.4 million).
+MODIFICATIONS
+The amount contractually outstanding for financial assets that have been derecognized in the current year
+and are still subject to enforcement proceedings is €229 million (previous year: €221 million).
+The loss allowance on assets measured at fair value in Stage 1 rose by €2 million (previous year: €0 million) in
+fiscal year 2021 and those in Stage 2 by €2 million (previous year: €0 million), resulting in a closing balance of
+€7 million (previous year: €3 million). Of this amount, €4 million is attributable to Stage 1 (previous year:
+€2 million) and €3 million to Stage 2 (previous year €1 million).
+25,585
+22,038
+785
+2,763
+Carrying amount at Dec. 31, 2020
+0
+Changes
+Changes in consolidated group
+Foreign exchange differences
+Stage 3
+0
+0
+1,376
+-1,376
+Stage 2
+-290
+290
+Stage 1
+Transfers to
+Modifications
+2,123
+958
+545
+545
+Carrying amount at Dec. 31, 2021
+2,795
+1,931
+23,668
+1,565
+1,577
+Carrying amount at Jan. 1, 2020
+Total
+No loss
+allowance
+Stage 4
+Simplified
+approach
+128
+Stage 3
+Stage 1
+€ million
+Consolidated Financial Statements
+CHANGES IN GROSS CARRYING AMOUNTS OF ASSETS MEASURED AT FAIR VALUE
+Notes to the Consolidated Financial Statements
+330
+28,394
+Stage 2
+within one
+to five years
+53,787
+2020
+Interest rate swaps
+Hedging interest rate risk
+€ million
+DISCLOSURES ON HEDGING TRANSACTIONS IN CASH FLOW HEDGES IN 2020
+-28
+34
+4
+1,289
+-31
+183
+109
+-925
+2,609
+1,277
+107,677
+23,852
+Hedging currency risk
+50
+Currency forwards and cross-currency swaps
+Combined interest rate and currency risk hedging
+1,174
+74
+347
+19,021
+1,866
+84,862
+-93
+96
+1
+13,461
+to determine
+hedge
+ineffectiveness
+Fair value changes
+Other liabilities
+Other assets
+Notional amount
+Cross-currency interest rate swaps
+Currency options
+39
+82
+17,009
+48
+1
+79
+56
+6,433
+713
+14'
+819
+34,248
+to determine
+hedge
+ineffectiveness
+Fair value changes
+Other liabilities
+Other assets
+Notional amount
+1 Prior-year figures adjusted.
+2
+2
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+to determine
+hedge
+ineffectiveness
+Fair value changes
+Other liabilities
+Other assets
+Notional amount
+Cross-currency interest rate swaps
+Combined interest rate and currency risk hedging
+1,824
+132
+Currency options
+Hedging currency risk
+Interest rate swaps
+Hedging interest rate risk
+€ million
+DISCLOSURES ON HEDGING TRANSACTIONS IN CASH FLOW HEDGES IN 2021
+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:
+337
+Currency forwards and cross-currency swaps
+1,607
+43
+40
+Hedge adjustments
+1 Prior-year figures adjusted.
+Financial liabilities
+Other financial assets
+Financial services receivables
+Combined interest rate and currency risk hedging
+Financial liabilities
+Other financial assets
+Financial services receivables
+Hedging currency risk
+Financial liabilities
+Other financial assets
+Financial services receivables¹
+Hedging interest rate risk
+€ million
+Carrying amount
+Cumulative hedge
+adjustments
+Cumulative hedge
+adjustments from
+current period/ discontinued hedging
+5
+15
+50
+-2
+30
+951
+8
+DISCLOSURES ON HEDGED ITEMS IN FAIR VALUE HEDGES IN 2020
+18
+423
+873
+-17
+7
+150
+35,924
+relationships
+fiscal year
+more than
+five years
+Cross-currency interest rate swaps
+Financial liabilities
+Financial services receivables
+Cumulative hedge
+Financial liabilities
+Other financial assets
+Financial services receivables
+Hedging interest rate risk
+€ million
+DISCLOSURES ON HEDGED ITEMS IN FAIR VALUE HEDGES IN 2021
+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:
+DISCLOSURES ON HEDGED ITEMS IN HEDGE ACCOUNTING
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+338
+component.
+The change in the fair value to determine ineffectiveness corresponds to the change in fair value of the designated
+2
+Carrying amount
+Cumulative hedge
+adjustments
+Hedge adjustments
+current period/
+fiscal year
+adjustments from
+Combined interest rate and currency risk hedging
+-20
+14
+955
+Financial liabilities
+11
+11
+Other financial assets
+593
+Financial services receivables
+Hedging currency risk
+-668
+281
+39,751
+relationships
+discontinued hedging
+Other financial assets
+Currency forwards, currency options, cross-currency swaps
+Combined interest rate and currency risk hedging
+602
+Interest rate swaps
+Hedging interest rate risk
+€ million
+DISCLOSURES ON GAINS AND LOSSES FROM FAIR VALUE HEDGES
+The following table shows the gains and losses from fair value hedges by risk type:
+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.
+DISCLOSURES ON GAINS AND LOSSES FROM FAIR VALUE HEDGES
+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 are executed or coordinated centrally by Group Treasury; exceptions
+include the MAN Energy Solutions, Porsche Holding Salzburg and TRATON GROUP subgroups and the Financial
+Services Division, as well as some regions such as South America.
+4.1 Hedging policy and financial derivatives
+Consolidated Financial Statements
+4. MARKET RISK
+Notes to the Consolidated Financial Statements
+334
+As of December 31, 2021, the maximum potential liability under financial guarantees amounted to
+€1,391 million (previous year: €447 million). Financial guarantees are assumed to be due immediately in all cases.
+The cash outflows from obligations from loan commitments and irrevocable credit commitments are presented
+in the section entitled “Other financial obligations", classified by contractual maturities.
+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 also particularly applies if hedges have been closed with offsetting transactions.
+Other operating result
+The cash outflows on other financial liabilities include outflows on liabilities for tax allocations amounting to
+€27 million (previous year: €38 million).
+Hedging currency risk
+Combined interest rate and currency risk hedging
+DISCLOSURES ON GAINS AND LOSSES FROM CASH FLOW HEDGES
+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:
+DISCLOSURES ON GAINS AND LOSSES FROM CASH FLOW HEDGES
+335
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+0
+0
+-12
+-42
+-43
+1
+Dec. 31, 2020
+Dec. 31, 2021
+Other operating result
+Other operating result
+383,731
+31,995
+156,611
+212,636
+22,677
+1
+22,675
+23,624
+14
+23,610
+Trade payables
+25,106
+98,159
+89,371
+26,797
+112,095
+81,006
+Financial liabilities
+Hedging currency risk
+Other financial
+liabilities
+Derivatives
+10,651
+136,958
+6,736
+56,294
+73,927
+195,125
+154,944
+411,527
+11,460
+152
+€ million
+2,156
+13,061
+170
+8,425
+35,392
+186,631
+189,503
+72,283
+74,236
+2,240
+9,151
+Hedging interest rate risk
+219,898
+2020
+Other assets
+Notional amount
+Interest rate swaps
+Hedging interest rate risk
+€ million
+DISCLOSURES ON HEDGING TRANSACTIONS IN FAIR VALUE HEDGES IN 2021
+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:
+DISCLOSURES ON HEDGING INSTRUMENTS IN HEDGE ACCOUNTING
+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 is 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.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+336
+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 differences in the parameters for the hedging
+instrument and the hedged item. Such income and expenses are recognized in other operating income/expenses
+or in the financial result.
+The table presents effects taken to equity, reduced by deferred taxes.
+Due to realization of the hedged item
+Other liabilities
+Due to early discontinuation of the hedging relationships
+Fair value changes
+ineffectiveness
+Hedging interest rate risk
+2021
+€ million
+DISCLOSURES ON HEDGING TRANSACTIONS IN FAIR VALUE HEDGES IN 2020
+Combined interest rate and currency risk hedging
+-112
+92
+67
+5,536
+Currency forwards, currency options, cross-currency swaps
+Hedging currency risk
+26
+244
+380
+37,589
+to determine
+hedge
+Reclassification from the cash flow hedge reserve to profit or loss
+Cross-currency interest rate swaps
+0
+Due to early discontinuation of the hedging relationships
+Reclassification from the cash flow hedge reserve to profit or loss
+1,434
+-5
+Recognized in profit or loss
+-2,365
+Gains or losses from changes in fair value of hedging instruments within hedge accounting
+Recognized in equity
+Hedging currency risk
+Gains or losses from changes in fair value of hedging instruments within hedge accounting
+Recognized in equity
+Due to realization of the hedged item
+Due to early discontinuation of the hedging relationships
+Reclassification from the cash flow hedge reserve to profit or loss
+0
+-46
+94
+3
+Recognized in profit or loss
+Due to realization of the hedged item
+-5
+Recognized in profit or loss
+692
+-15
+Gains or losses from changes in fair value of hedging instruments within hedge accounting
+Recognized in equity
+0
+-19
+39
+Due to realization of the hedged item
+Due to early discontinuation of the hedging relationships
+Reclassification from the cash flow hedge reserve to profit or loss
+Hedging commodities price risk
+5
+Recognized in profit or loss
+38
+-39
+Gains or losses from changes in fair value of hedging instruments within hedge accounting
+Recognized in equity
+Combined interest rate and currency risk hedging
+-6
+69
+17,182
+9,895
+17,175
+3,147
+30,218
+32,316
+20,048
+in other currencies
+20,900
+55
+41,003
+35,529
+Currency options
+Currency forwards/Cross-currency swaps
+27,939
+9,337
+12,776
+Dec. 31, 2020
+Currency options in USD
+38,214
+6,971
+54,598
+47,710'
+15,163
+Hedging currency risk
+Currency forwards/Cross-currency swaps in CNY
+4,594
+123
+14,054
+6,268
+Currency forwards/Cross-currency swaps in GBP
+Currency forwards/Cross-currency swaps in USD
+Currency forwards/Cross-currency swaps
+9,413
+10,296
+3,825
+1,655
+25,689
+45,653
+20,892
+92,233
+88,600'
+Hedging Currency risk
+Currency forwards/Cross-currency swaps
+Currency forwards/Cross-currency swaps in USD
+6,154
+4,916
+390
+Dec. 31, 2021
+11,461
+11,722
+1,289
+3,701
+6,287
+3,986
+Currency options in CNY
+6,122
+4,174
+Currency options in other currencies
+2,212
+3,817
+Combined interest rate and currency risk hedging
+Cross-currency interest rate swaps
+628
+661
+Notional amount of other derivatives
+Hedging Interest rate risk
+Interest rate swap
+7,527
+8,749
+6,029
+more than five
+years
+However, not all commodities are suitable for these types of hedges, e.g. because of low market liquidity or a
+lack of correlation between hedged item and hedging instrument. Likewise, selected commodities were purchased
+on the spot market, which led to a corresponding increase in inventories. 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.
+up to one year
+-60
+109
+-109
+Earnings after tax
+-1
+1
+60
+344
+Consolidated Financial Statements
+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, 2021, equity would have been €43 million
+(previous year adjusted: €29 million) higher. If market interest rates had been 100 bps lower as of December 31,
+2021, equity would have been €42 million (previous year adjusted: €29 million) lower.
+Notes to the Consolidated Financial Statements
+If market interest rates had been 100 bps higher as of December 31, 2021, earnings after tax would have been
+€321 million (previous year adjusted: €266 million) lower. If market interest rates had been 100 bps lower as of
+December 31, 2021, earnings after tax would have been €343 million (previous year adjusted: €298 million)
+higher.
+64
+96
+-102
+Currency forwards/Cross-currency swaps
+102
+-55
+55
+-6
+-64
+6
+4
+9
+-9
+3
+-3
+-96
+-4
+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 coal, CO2 certificates
+and rubber.
+Commodity price risk is limited by entering into forward transactions and swaps.
+The notional amounts of hedging instruments exposed to the uncertainty from the IBOR reform described above
+are €18,436 million (previous year: €25,466 million) in total. In the fiscal year, €13,876 million of this total was
+attributable to the USD LIBOR (previous year: €12,617 million), and €4,560 million to the CAD CDOR (previous
+year: €3,620 million). Compared with the previous year, we believe that the notional amounts of GBP LIBOR
+(previous year: €9,147 million) and JPY LIBOR (previous year: €82 million) hedging instruments are no longer
+exposed to any uncertainty from the IBOR reform. The JPY LIBOR hedging instruments have expired or have been
+switched to TONAR. For hedges in existence as of the reporting date, the GBP LIBOR was replaced by the SONIA
+interest rate benchmark in fiscal year 2021, and new transactions were entered into on the basis of SONIA.
+For GBP LIBOR-based derivatives maturing in the first quarter of 2022 that have no date for adjusting the interest
+rate after the reporting date, there was no need to change the interest rate benchmark.
+346
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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:
+NOTIONAL AMOUNT OF DERIVATIVES
+NOTIONAL AMOUNT OF DERIVATIVES
+€ million
+within hedge accounting
+Hedging interest rate risk
+Interest rate swap
+REMAINING TERM
+TOTAL
+NOTIONAL
+AMOUNT
+TOTAL
+NOTIONAL
+AMOUNT
+Notional amount of hedging instruments
+The uncertainty relates mainly to the following interest rate benchmarks: 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. Any replacement measures required have
+already been initiated for the interest rate benchmarks specified. By adapting systems and processes, these
+measures will 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.
+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 aforementioned
+uncertainty arising from the IBOR reform.
+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.
+If the commodity prices of the hedged nonferrous metals, coal and rubber had been 10% higher (lower) as of
+December 31, 2021, earnings after tax would have been €679 million (previous year: €559 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, the Invest-
+ment Guidelines define fixed minimum values, which are to be met by taking suitable risk management
+measures. 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, 2021, earnings after tax would have been €228 million
+(previous year: €160 million) higher and equity would have been €5 million (previous year: €2 million) higher.
+If share prices had been 10% lower as of December 31, 2021, earnings after tax would have been €246 million
+(previous year: €179 million) lower and equity would have been €5 million (previous year: €2 million) lower.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+345
+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.
+Microhedges 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, 2021, the value at risk was €233 million (previous year: €213 million) for interest rate risk
+and €164 million (previous year: €148 million) for foreign currency risk.
+The entire value at risk for interest rate and foreign currency risk at the Volkswagen Financial Services subgroup
+was €172 million (previous year: €170 million).
+5. METHODS FOR MONITORING HEDGE EFFECTIVENESS
+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.
+within one to
+five years
+in other currencies
+2.4930
+1,468
+1.9870
+0.0955
+4.0700
+3.2550
+0.9541
+0.0775
+1.9800
+0.9680
+37. 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 ensure that resources are used as efficiently as possible 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.
+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 9.0% is defined, which applies to both the business units and the individual products and
+product lines. The goal of generating a sustained return on investment of over 15.0% is anchored in Strategy 2025.
+The return on investment therefore serves as a consistent target in operational and strategic management and is
+348
+1.3100
+Notes to the Consolidated Financial Statements
+0.3030
+1.1150
+3.9020
+0.7582 -0.0375
+0.0455
+0.3900
+Interest rate for
+five years
+Interest rate for
+ten years
+0.0160
+1.8370 -0.2255
+3.0600
+3.8450
+1.0514
+-0.0125
+0.7100
+1.6550
+Consolidated Financial Statements
+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 10.4% in the reporting period,
+which is above the minimum rate of return on invested capital of 9.0%. Given the current cost of capital of 6.2%,
+this results in a positive value contribution of €4,756 million.
+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.
+4,756
+-54
+Earnings before tax
+Average equity
+Return on equity before tax in %
+Equity ratio in %
+7,504
+5,981
+34,591
+17.3
+8.8
+14.5
+13.2
+1 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.
+2 The value contribution corresponds to the Economic Value Added (EVA®). EVA® is a registered trademark of Stern Stewart & Co
+Hedging reserve
+Earnings after tax
+CZK / GBP
+Hedging reserve
+2,776
+31,463
+6,984
+6.5
+6.2
+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
+Automotive Division¹
+Operating result after tax
+Invested capital (average)
+Return on investment (ROI) in %
+Cost of capital in %
+Opportunity cost of invested capital
+Value contribution²
+Financial Services Division
+2021
+2020
+11,740
+113,386
+10.4
+7,450
+114,907
+6.5
+-0.6700
+13,123
+1.0454
+-0.5103
+16,925
+14,501
+Hedging Commodity price risk
+Forward commodity contracts (aluminum)
+934
+1,535
+3,363
+2,470
+Forward commodity contracts (copper)
+300
+370
+Forward commodity contracts (nickel)
+457
+2,146
+3,099
+390
+9,111
+Cross-currency interest rate swaps
+0
+14,591
+14,977
+Currency options
+Currency options in USD
+Currency options in other currencies
+4,450
+532
+3
+1,168
+82
+3
+41
+Combined interest rate and currency risk hedging
+636
+670
+2,992
+Forward commodity contracts (other)
+110
+JPY
+SEK
+USD
+Interest rate for
+six months
+-0.5757
+0.1232
+GBP
+0.6290
+2.4828
+3.7865
+0.4944 -0.0375 -0.0219
+0.1940
+Interest rate for
+one year
+-0.7100
+CZK
+CNY
+CHF
+8
+117
+938
+2,326
+143
+1 Prior-year figures adjusted.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+347
+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 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. The notional
+volume with a remaining maturity of less than one year was €16.8 billion (previous year: €10.4 billion), and the
+notional volume with a remaining maturity of more than one year amounted to €1.8 billion (previous year:
+€0.2 billion).
+Also in connection with fund investments, the Group held credit default swaps with a notional amount of
+€21.4 billion (previous year: €36.6 billion).
+Existing cash flow hedges in the notional amount of €0.6 billion (previous year: €2.1 billion) 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 0.62% 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 7.83.
+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
+AUD
+CAD
+0.3845
+EUR / BRL
+209
+CAD/USD
+-70
+1,355
+-1
+0
+1,284
+Gains or losses from effective hedging
+relationships
+94
+-1,932
+Total
+-39
+-1,877
+Reclassifications due to changes in whether the
+hedged item is expected to occur
+-5
+-5
+Reclassifications due to realization of the
+hedged item
+Balance at Dec. 31, 2021
+4
+0
+price risk
+currency risk
+Currency risk
+-1
+Hedging commodity price risk
+Designated components
+0
+Non-designated components
+Deferred taxes
+Total hedging commodity price risk
+0
+0
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+341
+CHANGES IN THE RESERVE
+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:
+CHANGES IN THE RESERVE FOR CASH FLOW HEDGES (OCI I)
+€ million
+Balance at Jan. 1, 2021
+Interest rate/
+Commodity
+Interest rate risk
+-83
+0
+39
+-40
+Reclassifications due to changes in whether the
+hedged item is expected to occur
+-41
+-41
+Reclassifications due to realization of the
+hedged item
+Balance at Dec. 31, 2020
+-724
+-19
+-744
+1,976
+-70
+-1
+0
+1,284
+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 generally 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.
+342
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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:
+1,355
+0
+38
+1,984
+28
+-665
+-1
+-637
+CHANGES IN THE RESERVE FOR CASH FLOW HEDGES (OCI I)
+€ million
+Balance at Jan. 1, 2020
+Interest rate risk
+Currency risk
+Interest rate/
+currency risk
+Commodity
+price risk
+Total
+-23
+135
+-20
+1
+93
+Gains or losses from effective hedging
+relationships
+-46
+0
+CHANGES IN THE RESERVE FOR HEDGING COSTS NON-DESIGNATED TIME VALUES OF OPTIONS
+Total hedging combined interest rate and currency risk
+Deferred taxes
+-969
+8
+Non-designated components
+-500
+-6
+Deferred taxes
+436
+0
+Total hedging currency risk
+-998
+-998
+1
+Combined interest rate and currency risk hedging
+Designated components
+-29
+-1
+Non-designated components
+Deferred taxes
+0
+Total hedging combined interest rate and currency risk
+-1,033
+0
+-1
+29
+49
+Hedging reserve
+Earnings after tax
+DISCLOSURES ON HEDGED ITEMS IN CASH FLOW HEDGES IN 2021
+€ million
+Hedging interest rate risk
+Designated components
+Non-designated components
+Deferred taxes
+Total hedging interest rate risk
+Hedging currency risk
+Designated components
+Notes to the Consolidated Financial Statements
+339
+RESERVE FOR
+Changes in fair value to
+determine hedge
+ineffectiveness
+Active cash flow hedges
+Discontinued cash flow
+hedges
+49
+47
+-1
+-18
+-29
+0
+-1
+Designated components
+-71
+0
+1
+1,956
+1,952
+4
+Non-designated components
+-1,008
+0
+Deferred taxes
+-90
+-299
+Total hedging currency risk
+1,956
+644
+3
+Combined interest rate and currency risk hedging
+Designated components
+0
+-1
+Non-designated components
+-1
+19
+1
+-90
+Non-designated components
+Deferred taxes
+Total hedging commodity price risk
+340
+Notes to the Consolidated Financial Statements
+DISCLOSURES ON HEDGED ITEMS IN CASH FLOW HEDGES IN 2020
+€ million
+Hedging interest rate risk
+Designated components
+Non-designated components
+Deferred taxes
+Total hedging interest rate risk
+Hedging currency risk
+Designated components
+RESERVE FOR
+Consolidated Financial Statements
+Changes in fair value to
+determine hedge
+ineffectiveness
+Active cash flow hedges
+Discontinued cash flow
+hedges
+-90
+Hedging commodity price risk
+€ million
+Consolidated Financial Statements
+Gains and losses from non-designated time value of options
+-13
+13
+-22
+22
+EUR / CAD
+Hedging reserve
+Earnings after tax
+-211
+123
+Earnings after tax
+-117
+24
+-11
+11
+EUR/JPY
+Hedging reserve
+200
+-193
+280
+-274
+-24
+-172
+172
+-283
+454
+-442
+Earnings after tax
+17
+-19
+-4
+4
+EUR / SEK
+Hedging reserve
+311
+-312
+287
+-287
+Earnings after tax
+-82
+81
+-78
+78
+EUR / AUD
+Hedging reserve
+284
+Earnings after tax
+-592
+-27
+-32
+93
+-20
+20
+Earnings after tax
+-49
+49
+-37
+37
+EUR / CZK
+-93
+Hedging reserve
+-89
+50
+-50
+Earnings after tax
+-39
+40
+-31
+31
+Balance at Jan. 1
+89
+Hedging reserve
+EUR / PLN
+55
+32
+EUR / TWD
+Hedging reserve
+136
+75
+-75
+Earnings after tax
+-6
+6
+-10
+10
+EUR/KRW
+Hedging reserve
+124
+-124
+114
+-114
+Earnings after tax
+-18
+18
+-55
+27
+574
+-136
+EUR / CHF
+-942
+Balance at Jan. 1
+Gains and losses from non-designated forward elements and CCBS
+-263
+-600
+Hedged item is recognized at a point in time
+Reclassification due to changes in whether the hedged item is expected to occur
+0
+26
+-766
+Hedged item is recognized at a point in time
+742
+749
+Hedged item is recognized at a point in time
+-287
+-766
+Balance at Dec. 31
+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 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.
+Reclassifications due to realization of the hedged item
+2020
+2021
+€ million
+CURRENCY RISK
+Hedging reserve
+2021
+2020
+59
+-35
+Hedged item is recognized at a point in time
+-171
+50
+Reclassifications due to changes in whether the hedged item is expected to occur
+Hedged item is recognized at a point in time
+0
+0
+Reclassification due to realization of the hedged item
+Hedged item is recognized at a point in time
+Balance at Dec. 31
+32
+43
+-80
+59
+CHANGES IN THE RESERVE FOR HEDGING COSTS NON-DESIGNATED FORWARD COMPONENT AND CROSS CURRENCY
+BASIS SPREAD (CCBS)
+Hedging transactions entered into in 2021 as part of foreign currency risk management were amongst others
+in Australian dollars, Brazilian real, British pound 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.
+CURRENCY RISK
+Consolidated Financial Statements
+Hedging reserve
+1,029
+-1,128
+520
+-477
+Earnings after tax
+-157
+157
+-114
+EUR/USD
+Hedging reserve
+233
+-224
+168
+-75
+Earnings after tax
+-672
+666
+-527
+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.
+527
+EUR / CNY
+59
+114
+80
+Notes to the Consolidated Financial Statements
+343
+-59
+The following table shows the sensitivities of the main currencies in the portfolio as of December 31, 2021:
+€ million
+DEC. 31, 2021
+DEC. 31, 2020
+-10%
++10%
+-10%
+Exchange rate
++10%
+EUR/GBP
+Hedging reserve
+1,737
+-1,745
+951
+-947
+Earnings after tax
+-78
+In France, a class action is pending that was filed by the French consumer organization Confédération de la
+Consommation, du Logement et du Cadre de Vie (CLCV) against Volkswagen Group Automotive Retail France and
+Volkswagen AG for up to 1 million French owners and lessees of vehicles with type EA 189 engines. This is an opt-in
+class action.
+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
+Belgium, Brazil, England and Wales, France, Germany, Italy, the Netherlands, Portugal, and South Africa. Alleged
+rights to damages and other relief are asserted in these actions. The pending actions include in particular the
+following:
+In Australia, two civil suits filed against Volkswagen AG and other Group companies by the Australian Competition
+and Consumer Commission (ACCC) were settled for the sum of AUD 75 million in the second half of 2019. On
+appeal, the amount of the settlement was increased to AUD 125 million by final judicial ruling in the reporting
+year.
+354
+Notes to the Consolidated Financial Statements
+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. Given the opt-out rule, the class action potentially covers all vehicles with
+type EA 189 engines purchased by consumers on the Belgian market after September 1, 2014, unless the right to
+opt out is actively exercised. The asserted claims are based on purported violations of unfair competition and
+consumer protection law as well as on alleged breach of contract.
+The financialright GmbH filed consolidated actions before various German courts asserting claims assigned
+to it by customers in Germany, Slovenia, and Switzerland against Volkswagen Group companies. Following the
+withdrawal of numerous motions for relief, approximately 36 thousand claims are currently still pending. Some
+cases have in the meantime moved to the first or second appeals level. There is, however, as yet no high court
+ruling on the permissibility of the business model of financialright GmbH.
+In Brazil, two consumer protection class actions are pending. The first of these class actions pertains to some
+17 thousand Amarok vehicles and the second to roughly 67 thousand later generation Amaroks. In the first class
+action, 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.
+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 appeals judgment remains non-final since Volkswagen do
+Brasil has appealed it to a higher court. The second class action was dismissed as inadmissible in October 2021.
+The judgment is appealable.
+A general possibility exists 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.
+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
+91 thousand plaintiffs have registered claims under the group litigation, for which the opt-in period has expired.
+Further plaintiff law firms have registered roughly 105 thousand additional claims with the court. The question
+of liability on the part of Volkswagen was not among the preliminary issues that the High Court decided in
+April 2020 and will be dealt with at a later stage of the proceedings. The main trial proceedings are to begin in
+January 2023. In addition, in late 2021 a new lawsuit was filed in court against Volkswagen AG, Volkswagen
+Financial Services (UK) Limited, and other Volkswagen Group companies in connection with certain diesel vehicles
+leased or sold in England, Wales, and Northern Ireland since 2009 and various other diesel engine types.
+Consolidated Financial Statements
+2. Product-related lawsuits worldwide (excluding the USA/Canada)
+Notes to the Consolidated Financial Statements
+Risks may furthermore result from possible decisions by the European Court of Justice construing EU type
+approval provisions.
+Moreover, additional administrative proceedings relating to the diesel issue are ongoing in other jurisdictions.
+The companies of the Volkswagen Group are cooperating with the government authorities.
+As the type approval authority of proper jurisdiction, the KBA is moreover continuously testing Audi,
+Volkswagen, 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.
+In connection with the diesel issue, the Stuttgart Office of the Public Prosecutor is conducting a criminal
+investigation on suspicion of fraud and illegal advertising; this investigation also involves a member of the Board
+of Management of Dr. Ing. h.c. F. Porsche AG.
+In August 2020, the Munich II Office of the Public Prosecutor issued a further indictment charging three former
+members of the Board of Management of AUDI AG and others with, among other things, fraud in connection with
+the diesel issue involving 3.0 1 and 4.21 TDI engines.
+In June 2020, the Munich II Regional Court accepted the substantially unchanged indictment of the Munich II
+Office of the Public Prosecutor, which also names a former Chair of the Board of Management of AUDI AG, and
+opened the main trial proceedings on charges of, among other things, fraud in connection with the diesel issue
+involving 3.01 and 4.2 1 TDI engines. Trial proceedings commenced in September 2020.
+353
+Consolidated Financial Statements
+Criminal investigations, regulatory offense proceedings, and/or administrative proceedings have been commenced
+in some countries. Criminal investigations into the core factual issues are being conducted by the Offices of the
+Public Prosecutor in Braunschweig and Munich.
+Consolidated Financial Statements
+In January 2021, the criminal proceedings regarding alleged market manipulation relating to capital market
+disclosure obligations in connection with the diesel issue were terminated by the Braunschweig Regional Court
+provisionally as regards the former Chair of the Board of Management and definitively as regards Volkswagen AG.
+In September 2020, the Braunschweig Regional Court allowed the indictment of the same former Chair of the
+Board of Management of Volkswagen AG and others to proceed on charges that include fraud in connection with
+the diesel issue involving type EA 189 engines. The proceedings against this former Chair of the Board of
+Management of Volkswagen AG have since been severed from the other cases. The trial of the other defendants
+began in September 2021.
+The Braunschweig Office of the Public Prosecutor is furthermore conducting investigations on suspicion of
+fraud in connection with type EA 288 engines.
+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 less than 10%.
+Notes to the Consolidated Financial Statements
+357
+In Italy, a trial level judgment in favor of the plaintiffs was rendered by the Venice Regional Court in July 2021 in
+the class action brought by the consumer association Altroconsumo on behalf of Italian customers; the judgment
+requires Volkswagen AG and Volkswagen Group Italia to pay damages to some 63 thousand consumers in an
+aggregate amount of roughly €185 million. Volkswagen AG and Volkswagen Group Italia have appealed this decision.
+In the Netherlands, an opt-out class action is pending that was brought by Stichting Volkswagen Car Claim
+seeking declaratory rulings for up to 165 thousand customers. A declaratory judgment partially granting the
+relief sought was issued in July 2021. In the opinion of the court, Volkswagen AG and the other defendant Group
+companies acted unlawfully with respect to the original engine management software. The court moreover held
+that consumers are entitled to a purchase price reduction from the defendant dealerships. No specific payment
+obligations result from the declaratory judgment. Any individual claims would then have to be established after-
+wards in separate proceedings. Volkswagen AG and the other defendant Group companies have appealed the decision.
+Furthermore, an opt-out class action lawsuit brought by the Diesel Emissions Justice Foundation seeking
+monetary damages on behalf of Dutch consumers is also pending. It currently remains unclear whether other
+consumers in addition to those in the Netherlands may join this class action. The class action relates to vehicles
+with type EA 189 engines, among others.
+In November 2021, the US Supreme Court denied petitions by Volkswagen requesting that it reviews both a
+decision by the US Court of Appeals for the Ninth Circuit declining to dismiss certain claims brought by Hillsborough
+County, Florida, and Salt Lake County, Utah, and a decision by the Ohio Supreme Court declining to dismiss
+certain claims brought by the State of Ohio.
+In the reporting year and in early 2022, Volkswagen settled the environmental claims brought by Montana
+and New Hampshire (in September 2021), Illinois (in December 2021), and Ohio (in January 2022).
+1. Criminal and administrative proceedings worldwide (excluding the USA/Canada)
+The Texas attorney general and some municipalities continue to pursue actions in state and federal courts
+against Volkswagen AG, Volkswagen Group of America, Inc., and certain affiliates, alleging violations of environ-
+mental laws. In January 2022, the Texas Supreme Court granted the February 2021 petition of the State of Texas
+for review of the Texas appellate court decision that had dismissed the environmental claims of Texas against
+Volkswagen AG and AUDI AG for lack of personal jurisdiction.
+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 against Volkswagen AG and other Volkswagen
+Group companies, in particular by customers, investors, salespersons, and various government agencies in Canada
+and the United States, including the attorneys general of several US states.
+4. Proceedings in the USA/Canada
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Excluding the United States and Canada and following the withdrawal of various actions, claims in connection
+with the diesel issue totaling roughly €9.5 billion are currently pending worldwide against Volkswagen AG in the
+form of investor lawsuits, judicial applications for dunning and conciliation procedures, and claims under the
+KapMuG. 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. Contingent liabilities have been disclosed
+where the chance of success was estimated to be not less than 10%.
+In the Netherlands, an unquantified action filed by a shareholder association seeking a determination that
+Volkswagen AG had supposedly misled the capital markets was withdrawn in early July 2021 after the European
+Court of Justice held that the courts of the Netherlands lacked international jurisdiction in a similar case.
+Volkswagen AG consented to the withdrawal of the action. This terminated the litigation without precluding the
+filing of subsequent lawsuits.
+Further investor lawsuits have been filed with the Stuttgart Regional Court against Volkswagen AG, in some
+cases along with Porsche SE as joint and several debtor. A further investor action for model declaratory judgment
+is pending before the Stuttgart Higher Regional Court against Porsche SE; Volkswagen AG is involved in this action
+as a third party intervening in support of a party to the dispute. The Wolverhampton City Council, Administrating
+Authority for the West Midlands Metropolitan Authorities Pension Fund, has been appointed model case
+plaintiff. Oral argument in this case began in July 2021 and is to be continued.
+The vast majority of these investor lawsuits are currently pending before the Braunschweig Regional Court.
+In August 2016, the Braunschweig Regional Court issued an order referring common questions of law and fact
+relevant to the investor lawsuits pending before it to the Higher Regional Court in Braunschweig for binding
+declaratory rulings pursuant to the Kapitalanleger-Musterverfahrensgesetz (KapMuG – German Capital Investor
+Model Declaratory Judgment Act). In this proceeding, common questions of law and fact relevant to these actions
+are to be adjudicated by the Braunschweig Higher Regional Court in a single consolidated proceeding (model case
+proceedings). The lawsuits filed with the Braunschweig Regional Court are 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 the pending cases that have been stayed as described. The model
+case plaintiff is Deka Investment GmbH. Oral argument in the model case proceedings before the Braunschweig
+Higher Regional Court began in September 2018 and is continuing at subsequent hearings. The latest indication
+from the court was that it may take evidence on certain points.
+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.
+In March 2019, the US Securities and Exchange Commission (SEC) filed a lawsuit against, among others,
+Volkswagen AG, Volkswagen Group of America Finance, LLC, and VW Credit, Inc., 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. In August 2020, the US District Court for the Northern
+District of California granted in part and denied in part Volkswagen's motion to dismiss. The claims dismissed
+by the court included all claims against VW Credit, Inc. related to asset-backed securities. In September 2020, the
+SEC filed an amended complaint that, among other things, removed the dismissed claims.
+3. Lawsuits filed by investors worldwide (excluding the USA/Canada)
+At this time, it cannot be estimated how many customers will choose to file lawsuits in the future in addition
+to those already pending and what prospect of success such lawsuits might have.
+Volkswagen estimates the likelihood that the plaintiffs will prevail to be 50 % or less in the great majority of cases:
+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 remote. Given the early stage of the
+proceedings, it is in many cases not yet possible to quantify the realistic risk exposure. Furthermore, provisions
+were recognized to the extent necessary based on the current assessment.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+356
+In 2020, the Bundesgerichtshof (BGH - Federal Court of Justice) issued a series of fundamental judgments
+deciding legal issues of major importance for the litigation still pending with regard to vehicles with type EA 189
+engines. The BGH held that buyers who had purchased vehicles prior to public disclosure of the diesel issue had
+damage claims against Volkswagen AG. While buyers can require reimbursement of the purchase price paid, they
+must accept a deduction for the benefit derived from using the vehicle and must return it to Volkswagen AG.
+Buyers have no tort-based claim for damages if they purchased their vehicles after the ad hoc announcement of
+September 22, 2015 or if they raise claims based solely on a temperature-dependent emissions control feature
+(so-called thermal window) in the engine. In February 2022, the BGH issued further fundamental judgments
+concerning vehicles with EA 189 motors deciding that buyers of new vehicles of the Volkswagen brand were
+entitled to so-called residual damage claims against Volkswagen AG after the knowledge-based limitation period
+has expired. As a result, Volkswagen AG has to repay the purchase price of the vehicle or the price paid by the
+dealer. The BGH decided that the claims for residual damages do not extend beyond claims of ordinary damages.
+Buyers need to subtract the value of usage and can only demand payment of the residual damages if they in
+return relinquish the vehicle. Prior to this the BGH had decided that, in contrast, buyers of used vehicles are not
+entitled to residual damages.
+In Germany, roughly 60 thousand individual lawsuits relating to various diesel engine types are currently
+pending against Volkswagen AG or other Group companies, with the plaintiffs suing for damages or rescission
+of the contract in most cases.
+Furthermore, individual lawsuits and similar proceedings are pending against Volkswagen AG and other
+Volkswagen Group companies in various countries; most of these lawsuits are seeking damages or rescission of
+the purchase contract.
+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.
+In Portugal, a Portuguese consumer organization has filed an opt-out class action. The class action potentially
+affects up to approximately 99 thousand vehicles with type EA 189 engines. The complaint seeks vehicle return
+and alleges damages as well.
+355
+Following the studies carried out by AUDI AG to check all relevant diesel concepts for possible irregularities
+and retrofit potential, 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. AUDI AG continues to anticipate that the
+total cost, including recall expenses, 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 updates in the vehicles of a large number of affected customers. The few software updates
+still being developed are expected to be submitted to the KBA for approval early in the second quarter of 2022.
+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:
+Liabilities under warranty contracts
+As a consequence of the diesel issue, numerous judicial and regulatory proceedings were initiated in various
+countries. Volkswagen has in the interim 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. The agreements in question include various partial consent decrees as well
+as a plea agreement that 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. Although Volkswagen is 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.
+9,700
+7,912
+9,111
+19
+15
+165
+71
+525
+504
+Dec. 31, 2020
+Dec. 31, 2021
+349
+Notes to the Consolidated Financial Statements
+Assets pledged as security for third-party liabilities
+Other contingent liabilities
+Liabilities under guarantees
+€ million
+38. Contingent liabilities
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+5. Special audit
+In a November 2017 ruling, 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 the members of
+the Board of Management and Supervisory Board of Volkswagen AG breached their duties in connection with
+the diesel issue from June 22, 2006 onwards 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 constitutional
+rights. 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 April
+2020, the Celle Higher Regional Court issued a ruling appointing a different special auditor. Volkswagen AG has
+filed a constitutional complaint with the Federal Constitutional Court contesting this formally unappealable
+decision as well on grounds of infringement of its constitutional rights and has suggested joinder of this matter
+with its initial constitutional complaint against the decision to appoint the special auditor. It is currently unclear
+when the Federal Constitutional Court will rule on the two constitutional complaints. The constitutional complaints
+have no suspensory effect.
+As to private civil law matters, in an environmental class action lawsuit seeking punitive damages on behalf
+of the residents of the Province of Quebec, after authorizing the case to proceed as a class, a Quebec court ruled
+in October 2020 that issues raised as to the viability of plaintiffs' damages theory should be deferred until trial.
+On that basis, the court denied a motion to dismiss by Volkswagen. Subsequently, Volkswagen settled the case.
+The settlement is subject to court approval, which is currently 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. Damage settlements
+8,621
+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 €4.3 billion (previous
+year: €4.2 billion), of which €3.6 billion (previous year: €3.5 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 €0.5 billion for potential liabilities resulting
+from the risk of tax proceedings instituted by the Brazilian tax authorities against MAN Latin America.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+352
+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 3.01 and V8 4.2 1 diesel engines.
+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 3.01 TDI
+engines until the EPA issued its November 2015 "Notice of Violation.”
+There are furthermore no findings that, following the publication in May 2014 of the study by the International
+Council on Clean Transportation, an unlawful “defeat device” under US law was disclosed to the persons
+responsible for preparing the 2014 annual and consolidated financial statements as the cause of the high NOx
+emissions in certain US vehicles with 2.01 type EA 189 diesel engines. Rather, at the time the 2014 annual and
+consolidated financial statements were being prepared, the persons responsible for preparing these financial
+statements remained under the impression that the issue could be resolved with comparatively little expense. In
+the course of the summer of 2015, however, it became progressively 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 that was later identified as an unlawful “defeat device" as defined by US
+law. This culminated in Volkswagen's disclosure of a "defeat device" to the EPA and the California Air Resources
+Board, a department of the Environmental Protection Agency of the State of California, on September 3, 2015.
+According to the assessment at the time by the responsible persons dealing with the matter, the magnitude of
+the costs expected to result for the Volkswagen Group (recall costs, retrofitting costs, and financial penalties) was
+not fundamentally dissimilar to that in previous cases involving other vehicle manufacturers. It therefore
+appeared to be manageable overall considering the business activities of the Volkswagen Group. This assessment
+by Volkswagen AG was based, among other things, on the advice of a law firm engaged in the USA for regulatory
+approval issues, according to which similar cases had in the past been amicably resolved 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 so-called 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. This software function was developed and imple-
+mented from 2006 on without knowledge at the level of the Board of Management. Members of the Board of
+Management did not learn of the development and implementation of this software function until the summer
+of 2015.
+On September 18, 2015, the US Environmental Protection Agency (EPA) publicly announced in a “Notice of Violation"
+that irregularities in relation to nitrogen oxide (NOx) emissions had been discovered in emissions tests on
+certain Volkswagen Group vehicles with 2.0 1 diesel engines in the USA. In this context, Volkswagen AG announced
+that noticeable discrepancies between the figures recorded in testing and those measured in actual road use had
+been identified in type EA 189 diesel engines and that this engine type had been installed in roughly eleven
+million vehicles worldwide. 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 1 diesel engines.
+Diesel issue
+351
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+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. For all clusters (groups of
+vehicles) within its jurisdiction, the Kraftfahrt-Bundesamt (KBA – German Federal Motor Transport Authority)
+determined that implementation of the technical measures would not result in any adverse changes in fuel
+consumption, CO2 emissions, engine output, maximum torque, and noise emissions.
+Unless otherwise explicitly stated, the amounts disclosed for the litigation being reported on refer only to
+the respective principal claim. Ancillary claims, such as for interest and litigation expense, are generally not
+considered.
+Criminal acts by individuals, which even the best compliance management system can never completely prevent,
+are another potential source of legal risks.
+Risks may also result from actions for infringement of intellectual property, including infringement of
+patents, brands, or other third-party rights, particularly in Germany and the USA. If Volkswagen is alleged or
+determined to have violated third-party intellectual property rights, it may for instance have to pay damages,
+modify manufacturing processes, or redesign products, and may be barred from selling certain products; this
+may result in delivery and production restrictions or interruptions.
+In connection with their business activities, Volkswagen Group companies engage in constant dialogue with
+regulatory agencies, including the Kraftfahrt-Bundesamt (KBA – German Federal Motor Transport Authority). It
+is not possible to predict with assurance how government regulators will assess certain issues of fact and law in
+a particular situation. For this reason, the possibility that certain vehicle characteristics and/or type approval
+aspects may in particular ultimately be deemed deficient or impermissible cannot be ruled out. This is fundamentally
+a question of the regulatory agency's specific evaluation in a concrete situation.
+-
+Various legal proceedings are pending worldwide, particularly in the USA, in which customers are asserting
+purported product-related 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. Compliance
+with legal or regulatory requirements (such as the GDPR) is another area in which risks may arise. This is particularly
+true in gray areas where Volkswagen and the relevant public authorities may interpret the law differently.
+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 connection with products and services or in relation to employees,
+public authorities, dealers, investors, customers, suppliers, 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.
+39. Litigation
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+350
+In line with IAS 37.92, no further statements have been made concerning estimates of financial impact or
+regarding uncertainty as to 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. Further information can be found under the section entitled “Litigation".
+Since 2016, the U.S. National Highway Traffic Safety Administration (NHTSA) has announced further extensions
+of the recalls of various models from a variety of manufacturers containing certain airbags produced by the
+Takata company. Recalls were also demanded 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 ongoing.
+Appropriate insurance has been taken out to cover these risks where they were sufficiently definite and such
+coverage was economically sensible. Where necessary based on the information currently available, identified
+and correspondingly measurable risks have been reflected by recognizing provisions in amounts considered
+appropriate or disclosing contingent liabilities, as the case may be. 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 or
+by provisions cannot be ruled out. This is, for instance, the case with regard to the legal risks assessed in connection
+with the diesel issue.
+In line with IAS 37.92, no statements have been made concerning estimates of financial impact or regarding
+uncertainty as to the amount or maturity of provisions and contingent liabilities in relation to proceedings in
+the USA/Canada. This is so as to not compromise the results of the proceedings or the interests of the Company.
+In addition, agreement was reached on damage payments by a former member of Audi's Board of Management
+and by a former member of Porsche's Board of Management. One former member of Audi's Board of Management
+was unwilling to reach a settlement; legal action is being prepared against him. Claims were already asserted against
+a former member of the Volkswagen Passenger Cars brand Board of Management.
+358
+At the end of March 2021, the Supervisory Board of Volkswagen AG announced the completion of the investigation
+initiated in October 2015 into the causes of and those responsible for the diesel issue. The Board resolved to claim
+damages from Prof. Dr. Martin Winterkorn, former Chair of the Board of Management of Volkswagen AG, and
+from Rupert Stadler, former member of the Board of Management of Volkswagen AG and former Chair of the
+Board of Management of AUDI AG, for breach of their duty of care under stock corporation law. The resolution
+was based on identified negligent breaches of duty. The investigation found no breaches of duty by other
+members of the Volkswagen AG Board of Management. The investigation covered all members of the Board of
+Management who were in office during the relevant period. In June 2021, agreements on damage payments were
+reached in this connection with the goal of achieving speedy, legally certain, and final resolution of the diesel
+issue as far as the civil liability of members of governing bodies is concerned. To this end, Volkswagen and Audi
+entered into damage settlements (liability settlements) with Prof. Dr. Winterkorn and Mr. Stadler respectively in
+connection with the diesel issue. Prof. Dr. Winterkorn's damage payment amounts to €11.2 million and that of
+Mr. Stadler to €4.1 million. Volkswagen has furthermore reached agreement with the relevant insurers under its
+directors and officers liability policies (D&O insurance) on payment of an aggregate sum of €270 million (coverage
+settlement).
+2021
+The Board of Management of Volkswagen AG announced on February 24, 2022 that, with the consent of the
+Supervisory Board, it had entered into a heads of agreement with Porsche Automobil Holding SE, on the basis of
+which the feasibility of a possible IPO for Dr. Ing. h. c. F. Porsche AG (Porsche AG) would be investigated. The
+actual feasibility of an IPO will depend on a large number of different parameters and the general market conditions.
+No final decisions have been made at this stage.
+Possible IPO of Dr. Ing. h. c. F. Porsche AG
+In February 2022, Volkswagen AG called a hybrid note with a principal amount of €1.1 billion, which had been
+placed in 2015 via Volkswagen International Finance N.V., Amsterdam, the Netherlands (issuer). Once called, the
+note has to be classified as debt in accordance with IAS 32, thus reducing the equity and net liquidity of the
+Volkswagen Group. The note, including all unpaid interest accrued up to that point, will be repaid in March 2022.
+Calling of hybrid note
+44. Events after the balance sheet date
+365
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+665,445
+667,647
+79,260
+75,040
+If the IPO is to go ahead, Porsche AG's share capital is to be divided into 50% preferred shares and 50% ordi-
+nary shares, and as part of a possible IPO up to 25% of the preferred shares are to be placed on the capital market.
+In connection with the possible IPO, Porsche Automobil Holding SE would acquire 25% plus one share of the
+ordinary shares of Porsche AG from Volkswagen AG at the placement price plus a premium of 7.5%.
+Volkswagen AG would continue to hold a majority interest in Porsche AG and consolidate the company in its
+consolidated financial statements. The industrial cooperation between Volkswagen AG and Porsche AG would be
+continued after any IPO.
+Russia-Ukraine conflict
+592,607
+At the time of preparing this report, there is a risk that the latest developments in the Russia-Ukraine conflict
+will have a negative impact on the Volkswagen Group's business. This may also result from bottlenecks in the
+supply chain. At the present time, it is not yet possible to conclusively assess the specific effects.
+Nor is it possible at this stage to predict with sufficient certainty to what extent further escalation of the
+Russia-Ukraine conflict will impact on the global economy and growth in the industry in fiscal year 2022.
+The Volkswagen Group does not have any material subsidiaries and equity investments in Ukraine.
+In Russia, the Volkswagen Group has in particular the production company at the Kaluga site, as well as sales
+units and financing companies. They could above all be adversely affected by the sanctions already resolved, but
+also by new sanctions and general developments in Russia.
+In relation to the net assets, financial position and results of operations of the Volkswagen Group, the
+business activities of the Volkswagen Group in these two countries are insignificant.
+There is a risk that a further escalation of the conflict could have a material adverse effect on the results of
+operations, financial position and net assets of the Volkswagen Group.
+366
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+45. Remuneration based on performance shares
+The remuneration of the Board of Management is based on the remuneration system updated by the Supervisory
+Board on December 14, 2020 with effect from January 1, 2021. The remuneration system implements the requirements
+of the AktG as amended by ARUG II and takes into account the recommendations of the German Corporate
+Governance Code (the Code) in the version dated December 19, 2019 (which entered into force on March 20,
+2020). The Annual General Meeting approved the remuneration system on July 22, 2021 with 99.61% of the votes
+cast.
+The new remuneration system has applied from January 1, 2021 to all Board of Management members with
+employment contracts newly concluded or renewed after the Supervisory Board resolution of December 14, 2020.
+For the Board of Management members already appointed at the time of the resolution by the Supervisory Board
+on December 14, 2020, the new remuneration system also applies in principle from January 1, 2021. Until such
+time as their contracts are renewed, however, the following exceptions apply: the performance share plan of the
+Board of Management members already appointed continues to have only a three-year performance period but
+otherwise corresponds to the performance share plan described in this system. Penalty and clawback rules and a
+four-year performance period (previously: three years) will only apply to Board of Management members already
+appointed on renewal of their contracts.
+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 were allocated benefits on the basis of 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. The
+performance period for beneficiaries below Board of Management level is 3 years. 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.
+PERFORMANCE SHARES
+Volkswagen AG would use the gains from a possible IPO of Porsche AG to accelerate the industrial and
+technological transformation of the Volkswagen Group. This includes investments in the transformation of
+global production capacities for electric vehicles and the financing of additional growth. If there is a successful
+IPO, Volkswagen AG will also propose to shareholders that a special dividend be distributed in the amount of 49%
+of the total gross proceeds from the placement of the preferred shares and the sale of the ordinary shares.
+17,678
+16,404
+Employees of Chinese joint ventures
+Consolidated Financial Statements
+The Korean competition authority KFTC is analyzing potential violations based on the facts of the EU case.
+The final report of the KFTC's appointed case handler was issued in November 2021. Volkswagen, Audi, and Porsche
+will reply to this report. The Turkish competition authorities, who investigated similar matters, issued a final
+decision in January 2022 in which they determined anticompetitive behavior to allegedly exist, but found that it
+had no effect on Turkey, for which reason they refrained from imposing fines on the German automakers.
+Volkswagen, Audi, and Porsche are currently considering whether to file an appeal. Based on comparable matters,
+the Chinese competition authority has instituted proceedings against Volkswagen, Audi, and Porsche, among
+others, and issued requests for information.
+In April 2019, the European Commission issued an initial 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 stated the European Commission's preliminary evaluation of the matter and afforded
+the opportunity to comment. Following entry into a formal settlement procedure, in April 2021 the Commission
+issued a revised statement of objections raising charges that were considerably more narrow. On this basis, a
+settlement decision was issued on July 8, 2021 concluding the administrative action and assessing a total fine of
+roughly €502 million against the three brands. The subject matter scope of the decision is limited to the cooperation
+of German automobile manufacturers on individual technical questions in connection with the development
+and introduction of SCR (selective catalytic reduction) systems 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. Volkswagen accepted the decision, which was served on July 12, 2021, and filed no appeal,
+thus allowing the decision to become final.
+Furthermore, antitrust lawsuits seeking damages have been received from customers. As is the case in any
+antitrust proceedings, this may result in further lawsuits for damages. No provisions have been recognized or
+contingent liabilities disclosed for these cases as most of them are still in an early stage and currently cannot be
+assessed for this reason. In other cases, the chance of a decision by a court of last resort that awards damages
+against MAN or Scania currently appears remote.
+In a judgment rendered in February 2022, the European General Court (Court of First Instance) rejected Scania's
+appeal in its entirety. Scania is currently analyzing the judgment and will in timely fashion decide whether to
+appeal it to the European Court of Justice. Scania had already recognized a provision of €0.4 billion in 2016 and
+increased this provision to approximately €0.9 billion in the reporting year.
+In September 2017, the European Commission fined Scania €0.88 billion. Scania appealed to the European
+Court of Justice in Luxembourg and mounted a comprehensive defense.
+In 2011, the European Commission conducted searches at European truck manufacturers for suspected unlawful
+exchange of information during the period from 1997 to 2011; in November 2014, the Commission issued a
+statement of objections to MAN, Scania, and the other truck manufacturers concerned. In its settlement decision
+of July 2016, the European Commission assessed fines against 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.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+360
+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 2009. In
+December 2017, an adverse administrative appeal ruling was rendered against MAN Latin America. MAN Latin
+America challenged this ruling before the regular court in 2018. Estimation of the risk in the event the tax
+authorities prevail on all points is subject to uncertainty because of differences in the amount of penalties and
+interest that might then apply under Brazilian law. However, a positive outcome for MAN Latin America remains
+the expectation. Should this not occur, a risk of about BRL 3.2 billion could result for the contested period from
+2009 onwards; this amount has been included in contingent liabilities in the notes.
+In 2011, ARFB Anlegerschutz UG (haftungsbeschränkt) filed a claim for damages against Volkswagen AG and
+Porsche SE 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 being sought based on
+allegedly assigned rights currently amount to approximately €2.26 billion plus interest. In April 2016, the Hanover
+Regional Court formulated numerous objects of declaratory judgment that the antitrust panel of the Higher
+Regional Court in Celle will decide on in model case proceedings under the KapMuG. At the first hearing in
+October 2017, the court already indicated that it currently sees no justification for claims against Volkswagen AG,
+both because the pleadings are not sufficiently specific and for substantive legal reasons. Volkswagen AG sees
+the court's statements as confirmation that the claims against the Company are absolutely baseless. The Higher
+Regional Court has yet to render a decision. Further hearings are scheduled for 2022.
+Additional important legal cases
+An amount of around €2.1 billion (previous year: €1.9 billion) has been included in the provisions for litigation
+and legal risks as of December 31, 2021 to account for the currently known legal risks related to the diesel issue
+based on the presently available information and the current assessments. Where adequately measurable at this
+stage, contingent liabilities relating to the diesel issue have been disclosed in the notes in an aggregate amount
+of €4.3 billion (previous year: €4.2 billion), whereby roughly €3.6 billion (previous year: €3.5 billion) of this
+amount results from lawsuits filed by investors in Germany. The provisions recognized, the contingent liabilities
+disclosed, and the other latent legal risks in the context of the diesel issue are in part subject to substantial
+estimation risks given the complexity of the individual relevant factors, the ongoing coordination with the
+authorities, and the fact that the fact-finding efforts have not yet been concluded. Should these legal or
+estimation risks materialize, this could result in further substantial financial charges. In particular, adjustment
+of the provisions recognized in light of knowledge acquired or events occurring in the future cannot be ruled out.
+In line with IAS 37.92, no further statements have been made concerning estimates of financial impact or
+regarding uncertainty as to 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.
+Each performance period of the performance share plan has a term of three or four years. For members of the
+Board of Management and of top management, the annual target amount under the LTI is converted at the time
+of granting into performance shares on the basis of the initial reference price of Volkswagen's preferred shares.
+This annual target amount is allocated to the respective beneficiaries as a pure calculation position. Based on the
+degree of target achievement for the annual earnings per Volkswagen preferred share, the number of performance
+shares is definitively determined on the basis of a three- or four-year, forward-looking performance period. 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.
+7. Risk assessment regarding the diesel issue
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Performance-related wage-earners
+Salaried staff
+263,193
+261,165
+313,010
+307,342
+576,203
+568,508
+of which in the passive phase of partial retirement
+12,171
+10,762
+Vocational trainees
+359
+For all other beneficiaries, the payment amount is determined by multiplying the target amount by the degree
+of target achievement for the annual earnings per Volkswagen preferred share and the ratio of the closing reference
+price at the end of the period, plus a dividend equivalent, to the initial reference price. Target achievement is determined
+on the basis of a three-year performance period with a forward-looking horizon of one year. As a departure from
+this, target achievement in 2020 will initially 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. For all beneficiaries, the payment amount under the performance share plan is limited to 200% of the target
+amount; the payment amount is reduced by 20% if the average ratio of capex to sales revenue or the R&D ratio in the
+Automotive Division is smaller than 5% during the performance period.
+BOARD OF MANAGEMENT
+Notes to the Consolidated Financial Statements
+of which granted during the reporting period
+Dec. 31, 2021
+Dec. 31, 2020
+€ million
+118
+133
+€ million
+124
+132
+€ million
+86
+130
+€ million
+Shares
+Shares
+92
+Granted performance shares
+84
+1,040,271
+509,181
+MEMBERS OF MANAGEMENT AND SELECTED PARTICIPANTS BELOW MANAGEMENT LEVEL
+In the fiscal year, beneficiary members of management and selected participants below management level were
+allocated a target amount of €665 million (previous year: €629 million) on which target achievement of 100% is
+based. As of December 31, 2021, the total carrying amount of the obligation, which corresponded to the intrinsic
+value of the liabilities, was €836 million (previous year: €609 million). A total expense of €857 million (previous
+year: €613 million) was recognized for this commitment in the reporting period.
+368
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+46. 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. This means that Porsche SE cannot elect all shareholder representatives to
+the Supervisory Board of Volkswagen AG 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
+2009. Volkswagen AG has also undertaken to indemnify the Einlagensicherungsfonds against any losses
+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 estimated in the low triple-digit million euro range will arise
+for Volkswagen AG. New information emerging in the future could result in an increase or decrease in the
+potential compensation obligation.
+1,684,516
+644,245
+Consolidated Financial Statements
+Fair value at grant date
+Carrying amount of the obligation
+Total expense of the reporting period
+Carrying amount of the obligation
+Intrinsic value of the obligation
+Fair value on granting date
+Granted performance shares
+of which granted during the reporting period
+Notes to the Consolidated Financial Statements
+367
+Dec. 31, 2021
+Dec. 31, 2020
+€ million
+34
+2
+€ million
+Intrinsic value of the obligation
+65
+€ million
+41
+30
+€ million
+18
+16
+Shares
+Shares
+379,819
+389,524
+125,251
+99,150
+The disclosure relates to current and former members of the Board of Management.
+MEMBERS OF TOP MANAGEMENT
+Total expense of the reporting period
+39
+361
+In October 2020, the US District Court for the Northern District of California dismissed two antitrust class action
+complaints. The plaintiffs in these actions had alleged that several automobile manufacturers including
+Volkswagen AG and other Group companies had conspired to unlawfully increase vehicle prices 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 that the alleged agreements unreasonably
+restrained competition in violation of US law. The plaintiffs appealed this ruling. In August 2021, the plaintiffs in
+one of the two class actions withdrew their appeal. In October 2021, the Ninth Circuit Court of Appeals affirmed
+the dismissal of the other class action by the US District Court for the Northern District of California. After receiving
+an extension until December 27, 2021, the plaintiffs in the latter class action filed a motion for rehearing, which
+the Ninth Circuit denied on January 25, 2022. On December 28, 2021, those plaintiffs also filed a motion seeking
+to set aside the District Court's October 2020 judgment and to be allowed to file a new amended complaint. Plaintiffs
+in Canada filed claims with similar allegations on behalf of putative classes of purchasers against several automobile
+manufacturers, including Volkswagen Group Canada Inc., Audi Canada Inc., and other Volkswagen Group companies.
+Neither provisions nor contingent liabilities are stated because the early stage of the proceedings makes an
+assessment of the realistic risk exposure currently impossible.
+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.
+363
+In addition to the other financial obligations shown in the table, purchase commitments exist for inventories
+with a short turnover period, which arise primarily from the Master Collaboration Agreement with Ford Motor
+Company for the joint development of vans and mid-sized pickups for the global market.
+The rise in the remaining other financial obligations is mainly attributable to obligations under development
+and supply contracts.
+In the previous year, this item reflected the payment of the purchase price for the acquisition of all of
+Navistar's outstanding shares totaling around USD 3.7 billion.
+Other financial obligations include an amount of €0.7 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.
+1 Prior-year figures adjusted.
+30,286
+748
+3,641
+25,897
+9,026
+575
+2,160
+6,291
+364
+Miscellaneous other financial obligations
+167
+265
+313
+Obligations from leasing and rental contracts
+11,739
+6
+72
+11,660
+Obligations from loan commitments and irrevocable credit
+commitments¹
+6
+1,332
+7,438
+6
+107
+746
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+41. Total fee of the Group auditor
+40,516
+43,677
+8,413
+9,033
+32,103
+34,644
+2020
+2021
+43. Average number of employees during the year
+Social security, post-employment and other employee benefit costs
+Wages and salaries
+€ million
+42. Personnel expenses
+The financial statement audit services related to the audit of the consolidated financial statements of
+Volkswagen AG and to the annual financial statements of German Group companies, as well as to reviews of the
+interim consolidated financial statements of Volkswagen AG and of the interim financial statements of German
+Group companies. Other assurance services mainly related to statutory and non-statutory audits as well as non-
+statutory assurance services for capital market transactions. The tax advisory services provided by the auditors
+in the reporting period related primarily to assistance in the preparation of tax returns for employees on
+delegations abroad. Other services provided by the auditors related primarily to advisory services in
+connection with transformation processes and in the area of human resources development.
+53
+36
+7
+Under the provisions of the Handelsgesetzbuch (HGB - German Commercial Code), Volkswagen AG is obliged to
+disclose the total fee charged for the fiscal year by the Group auditor, Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft.
+€ million
+Financial statement audit services
+Other assurance services
+Tax advisory services
+Other services
+2021
+1,225
+2020
+19
+3
+5
+7
+21
+4
+22
+2020
+1,037
+investment property
+1,823
+7,368
+2
+1,220
+6,146
+investment property
+intangible assets
+property, plant and equipment
+Dec. 31, 2021
+TOTAL
+PAYABLE
+from 2027
+2023 - 2026
+2022
+PAYABLE
+501
+PAYABLE
+Purchase commitments in respect of
+€ million
+40. Other financial obligations
+Consolidated Financial Statements
+In line with IAS 37.92, no further statements have been made concerning estimates of financial impact or regarding
+uncertainty as to 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.
+The lawsuit filed by GT Gettaxi Ltd. alleging in particular large damage claims, which was served on Volkswagen
+AG and another defendant in February 2020, was dismissed by the Cypriot first instance court in August 2021
+due to lack of jurisdiction of the Cypriot courts. GT Gettaxi Ltd. has appealed this decision to the Supreme Court
+(which is the court of final appeal in Cyprus).
+Provisions were recognized by Volkswagen Bank GmbH and Volkswagen Leasing GmbH for possible claims in
+connection with financial services provided to consumers. These relate to actions involving certain features of
+customer loan and leasing agreements that may toll the running of the statutory cancellation time periods.
+In November 2021, three claimants accompanied by Greenpeace filed a lawsuit against Volkswagen AG before
+the Braunschweig Regional Court. The action seeks to compel Volkswagen to initially reduce in stages and by 2029
+completely cease its production and placement into the stream of commerce of vehicles with internal combustion
+engines as well as to reduce greenhouse gas emissions from development, production, and marketing (including
+third party vehicle use). The lawsuit further seeks to compel Volkswagen to exercise influence over Group
+companies, subsidiaries, and joint ventures so as to cause them to fulfill these demands as well. In addition,
+another action with identical requests for relief and by and large the same rationale has been filed by an organic
+farmer with the support of Greenpeace before the Detmold Regional Court. Volkswagen is analyzing the lawsuits
+and will defend itself against them.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+362
+In December 2021, Navistar entered into a final Profit Sharing Settlement Agreement to terminate with past,
+present, and future effect certain disputes most recently litigated before an arbitration tribunal concerning the
+calculation of profit sharing amounts for purposes of Navistar's corporate retiree healthcare commitments. At
+the same time and in the same context, an agreement to settle the class action lawsuits was also reached with
+class action members; this agreement is still subject to approval by the supervising court, which will hear the
+class action members before ruling. The final agreement provides for a payment by Navistar in an amount of
+€491 million (USD 556 million); in fulfillment of the agreement, Navistar has already made an initial payments
+totaling €88 million (USD 100 million). Navistar recognized provisions in this regard in prior periods.
+In January 2021, a consolidated complaint was filed with the US District Court for the Northern District of
+California alleging that the affected vehicles used certain software and/or hardware that resulted in increased
+emissions and/or overstated fuel economy estimates as compared to the results of certification testing. The
+defendants (Volkswagen AG, Dr. Ing. h.c. F. Porsche AG, and Porsche Cars North America, Inc.) have moved for
+dismissal of the action.
+Porsche AG has discovered potential regulatory issues relating to vehicles for various markets worldwide. There
+are questions as to the permissibility of specific hardware and software components used in type approval
+measurements. Differences compared with production versions may also have occurred in certain cases. Based
+on the information presently available, current production is not affected, however. The issues are unrelated to
+the defeat devices that were at the root of the diesel issue. Porsche AG is cooperating with the relevant authorities
+including the Stuttgart Office of the Public Prosecutor, which is investigating the matter in Germany. Based on
+the available information, no formal criminal investigation has been opened against the company, however.
+Porsche's own internal investigations are still in progress.
+Notes to the Consolidated Financial Statements
+2,324
+15
+15
+intangible assets
+property, plant and equipment
+Dec. 31, 2020
+from 2026
+2022-2025
+2021
+TOTAL
+PAYABLE
+PAYABLE
+PAYABLE
+Purchase commitments in respect of
+€ million
+34,700
+2,183
+5,673
+26,844
+9,485
+Obligations from loan commitments and irrevocable credit
+commitments
+14,560
+127
+47
+14,734
+Obligations from leasing and rental contracts
+6,402
+324
+178
+774
+Miscellaneous other financial obligations
+3,976
+3,553
+1,956
+271
+586,185
+Consolidated Financial Statements
+To assess the recognition and measurement of the provisions for legal risks and the disclosure of contingent
+liabilities arising from the diesel issue, we considered, in particular, work and opinions by experts engaged by
+the executive directors of the VW Group in addition to available official notices and court judgments as part of a
+risk-based selection of significant transactions. Moreover, with the involvement of our own legal and forensic
+specialists, we held regular meetings with the Legal department and the external lawyers engaged by the executive
+directors of the VW Group to obtain oral explanations about the current developments and reasons leading to the
+assessments of the ongoing proceedings. We compared confirmations received from external lawyers with the risk
+assessment by the executive directors. We also regularly reviewed publicly available information, such as
+media reports, to assess the completeness of the provisions and contingent liabilities.
+Consolidated Financial Statements
+Responsibility Statement 373
+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, March 1, 2022
+Volkswagen Aktiengesellschaft
+The Board of Management
+H.DRESS MURAT AUSEL
+Herbert Diess
+в. Дими
+Oliver Blume
+М.Д
+Markus Duesmann
+Haule Stas
+Volkswagen Aktiengesellschaft
+The Board of Management
+Hauke Stars
+R. Both
+Ralf Brandstätter
+J. Mil
+G.
+Gunnar Kilian
+Hildegard Wortmann
+Aus
+Arno Antlitz
+Manfred Döss
+Zsmak
+Thomas Schmall-von Westerholt
+374
+Murat Aksel
+Wolfsburg, March 1, 2022
+The individual remuneration of the members of the Board of Management and the Supervisory Board is explained
+in the remuneration report. A comprehensive assessment of the individual remuneration components can also be
+found there.
+For former members of the Board of Management and their surviving dependents €17.5 million (previous year:
+€35.9 million) were granted. Pension provisions in accordance with IFRSS for this group of individuals amounted
+to €371.9 million (previous year: €396.3 million).
+€
+Short-term benefits
+Benefits based on performance shares and virtual shares
+Post-employment benefits (service cost only)
+Termination benefits
+2021
+2020
+40,369,641
+24,108,076
+30,682,893
+6,570,097
+9,772,143
+7,248,486
+1,655,497
+11,577,039
+75,905,357
+56,078,514
+The post-employment benefits relate to additions to pension provisions for current members of the Board of
+Management. The termination benefits relate to the payments made to Mr. Witter in connection with his
+departure from the Board of Management on March 31, 2021 (previous year: departure of Mr. Renschler and
+Mr. Sommer).
+372
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+47. German Corporate Governance Code
+On December 9, 2021, the Board of Management and Supervisory Board of Volkswagen AG issued their declara-
+tion 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/Investor Relations/corporate-governance/declaration-
+of-conformity.html.
+In December 2021, 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 https://ir.traton.com/websites/traton/English/5000/corporate-governance.html.
+48. Remuneration of the Board of Management and the Supervisory Board
+Total remuneration granted to the members of the Board of Management amounted to €51.5 million (previous
+year: €38.2 million).
+Under the performance share plan, current members of the Board of Management were granted a total of
+110,165 performance shares for fiscal year 2021 (previous year: 77,800), whose value at the grant date amounted
+to €16.3 million (previous year: €12.7 million).
+Advances granted to members of the Board of Management under the performance share plan amounted
+to €1.4 million as of December 31, 2021 (previous year: €6.5 million). In the fiscal year, a total of €5.1 million
+(previous year: €4.3 million) of the advances paid to members of the Board of Management were deducted from
+the payment amount under the performance share plan.
+Total remuneration granted to the members of the Supervisory Board amounted to €5.2 million (previous
+year: €5.3 million).
+PENSION ENTITLEMENTS AND BENEFITS TO RETIRED MEMBERS OF THE BOARD OF MANAGEMENT
+Independent auditor's report
+Consolidated Financial Statements
+Independent auditor's report
+TO VOLKSWAGEN AKTIENGESELLSCHAFT
+In addition to the Covid-19 pandemic, temporary production stops due to semiconductor supply shortages
+in particular had a negative effect on the cash inflows of the VW Group and its brands in fiscal year 2021. The
+executive directors of the VW Group expect cash inflows to continue to be affected in fiscal year 2022.
+In addition, the acquisition of the Navistar Group in fiscal year 2021 increased the carrying amount of good-
+will and the acquired brand names.
+The ongoing transformation of the core business toward electromobility and digitalization, the transition to
+autonomous vehicles and growing environmental regulation lead to uncertainties in the estimation of market
+shares and margins for electric vehicles and the long-term growth rates. These estimates by the executive directors
+are subject to risk and may be revised in response to changes in environmental regulation and market conditions.
+In addition, the executive directors have scope for judgment in determining the cash-generating units for
+impairment testing, in determining the discount rates used and the long-term growth rates assumed.
+In view of the foregoing, the materiality of goodwill and the acquired brand names in relation to total assets,
+the complexity of the valuation and the judgment exercised during valuation, the impairment testing of goodwill
+and the acquired brands was a key audit matter.
+Consolidated Financial Statements
+Independent auditor's report
+377
+Auditor's response
+During our audit, we involved valuation specialists to assess among other things the methodology used to
+perform the impairment tests in light of the provisions of IAS 36. We also checked the arithmetical accuracy of
+the valuation models used.
+On the basis of the VW Group's internal reporting, we assessed for the acquired brands whether the brands
+represent the lowest level within the VW Group at which independent cash inflows are generated and whether
+goodwill is monitored at brand level for internal management purposes.
+We analyzed the planning process established in the VW Group and tested the operating effectiveness of the
+controls implemented in the planning process. As a starting point, we compared the VW Group's five-year
+operational plan prepared by the executive directors and acknowledged by the Supervisory Board with the fore-
+cast figures in the underlying impairment tests. We discussed the key planning assumptions for selected brands
+to which significant goodwill and acquired brand names are allocated with the executive directors and compared
+them with past earnings and cash inflows to assess the planning accuracy. We based plausibility testing of the
+inputs for the impairment tests among other things on a comparison with general and industry-specific market
+expectations underlying the expected cash inflows. We discussed with the executive directors the effects of
+the Covid-19 pandemic and the semiconductor supply shortages on the development of cash inflows in the
+individual cash-generating units and compared them with current market expectations. We also investigated
+the expectations regarding the development of market shares for battery electric vehicles and the effects on the
+planned investments and their indirect effects on the long-term cash inflows expected by the executive directors.
+With respect to the rollforward from the medium-term plan to the long-term forecast, we assessed the
+plausibility of the assumed growth rates by comparing them with observable data. To assess the discount rates
+and growth rates applied, we analyzed the inputs used to determine them on the basis of publicly available
+information and obtained an understanding of the methods used with regard to the relevant requirements of
+IAS 36.
+We also assessed the sensitivity analyses performed by the executive directors in order to estimate any
+potential impairment risk associated with a reasonably possible change in one of the significant assumptions
+used in the valuation.
+Our procedures did not lead to any reservations relating to the recoverability of goodwill and the acquired
+brand names.
+Reference to related disclosures
+With regard to the recognition and measurement policies applied for goodwill and the acquired brand names,
+refer to the disclosure on intangible assets in the "Accounting policies" section of the notes to the consolidated
+financial statements. For the related disclosures on judgments by the executive directors and sources of
+estimation uncertainty as well as the disclosures on goodwill and the acquired brand names, refer to the disclosure
+in the "Accounting policies" section on estimates and assumptions by management and note 12, “Intangible
+assets" in the "Balance Sheet disclosures" section of the notes to the consolidated financial statements. In the
+group management report, refer to the "Report on Risks and Opportunities” chapter, “Risks and opportunities"
+section, subsection “Risks arising from the recoverability of goodwill or brand names and from equity invest-
+ments."
+378
+Independent auditor's report
+Consolidated Financial Statements
+3. Capitalization and recoverability of development costs
+Reasons why the matter was determined to be a key audit matter
+Key criteria for capitalizing development costs are the ability to implement the development projects (including
+their technical feasibility, the intention to complete them and the ability to use them) as well as the realization
+of an expected future economic benefit. The complexity of research and development projects is mounting in
+view of the technological transformation of the VW Group and the resulting new development areas (including
+high investments in electromobility, software and autonomous driving). Assessments of project feasibility
+are playing an ever greater role in this connection and entail the use of considerable judgment.
+Where capitalized development costs are not yet subject to amortization, they must be tested for impairment
+as part of the related cash-generating unit at least annually at the level of the brands defined as cash-generating
+units. The assumption of realizing future economic benefits and the result of testing the recoverability of
+capitalized development costs during the analyses and impairment tests performed are highly dependent
+on the executive directors' estimate of future cash flows and which discount rates they use. The recoverable
+amount of the cash-generating units is calculated on the basis of their value in use, applying discounted cash
+flow models.
+In addition to the Covid-19 pandemic, temporary production stops due to semiconductor supply shortages in
+particular had a negative effect on the cash inflows of the VW Group and its brands in fiscal year 2021. The
+executive directors of the VW Group expect cash inflows to continue to be affected in fiscal year 2022.
+The ongoing transformation of the core business toward electromobility and digitalization, the transition to
+autonomous vehicles and growing environmental regulation lead to uncertainties in the estimation of market
+shares and margins for electric vehicles and the long-term growth rates. Growth expectations of the executive
+directors are subject to risk and may be revised in response to changes in environmental regulation and market
+conditions.
+In addition, the executive directors have scope for judgment in determining the cash-generating units for
+impairment testing, in determining the discount rates used and the long-term growth rates assumed.
+In light of the foregoing, the materiality of the capitalized development costs in relation to total assets, the
+total amount of research and development costs and the judgment exercised during valuation, the capitalization
+of development costs and the impairment test were a key audit matter.
+The result of the impairment testing of goodwill and the acquired brand names is highly dependent on the
+executive directors' estimate of future cash flows and which discount rates they use. The recoverable amount of
+the cash-generating units is calculated on the basis of their value in use, applying discounted cash flow models.
+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:
+Reasons why the matter was determined to be a key audit matter
+The information presented and the statements made in connection with the diesel issue, including the comments
+on the underlying causes, on when the members of the Board of Management became aware of the issue and on
+the effects on the accompanying financial statements are contained in the “Key events” and “Accounting policies"
+sections, on management's estimates and assessments in the “Balance sheet disclosures" section, note 30, “Noncurrent
+and current provisions," note 38, “Contingent liabilities” and note 39, “Litigation” of the notes to the consolidated
+financial statements and in the "Report on Risks and Opportunities" chapter of the group management report,
+"Legal risks" section, subsection "Diesel issue."
+REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE GROUP MANAGEMENT REPORT
+OPINIONS
+We have audited the consolidated financial statements of VOLKSWAGEN AKTIENGESELLSCHAFT, Wolfsburg, and
+its subsidiaries (the Group), which comprise the consolidated income statement and consolidated statement of
+comprehensive income for the fiscal year from 1 January to 31 December 2021, and the consolidated balance
+sheet as at 31 December 2021, consolidated statement of changes in equity and consolidated cash flow statement
+for the fiscal year from 1 January to 31 December 2021, and notes to the consolidated financial statements, in-
+cluding a summary of significant accounting policies. In addition, we have audited the group management re-
+port of VOLKSWAGEN AKTIENGESELLSCHAFT, which is combined with the Company's management report, for the
+fiscal year from 1 January to 31 December 2021. In accordance with German legal requirements, we have not
+audited the content of the parts of the group management report specified in the appendix to the auditor's re-
+port and the company information stated therein that is provided outside of the annual report and is referenced
+in the group management 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 Sec. 315e
+(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 31 December
+2021 and of its financial performance for the fiscal year from 1 January to 31 December 2021, 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 oppor-
+tunities and risks of future development. Our opinion on the group management report does not cover
+the content of the parts of the group management report listed in the appendix to the auditor's report.
+Pursuant to Sec. 322 (3) 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.
+BASIS FOR THE OPINIONS
+We conducted our audit of the consolidated financial statements and of the group management report in
+accordance with Sec. 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 Art. 10 (2) f) of the EU Audit Regulation,
+we declare that we have not provided non-audit services prohibited under Art. 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 opinions
+on the consolidated financial statements and on the group management report.
+Consolidated Financial Statements
+Independent auditor's report
+375
+KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+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 fiscal year from 1 January to 31 December 2021. These matters were
+addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
+opinion thereon; we do not provide a separate opinion on these matters.
+Below, we describe what we consider to be the key audit matters:
+1. Accounting treatment of the risk provisions for the diesel issue
+Reasons why the matter was determined to be a key audit matter
+Due to indications of irregularities in connection with exhaust gas emissions from diesel engines in certain
+vehicles of the VW Group, regulatory authorities in numerous countries (particularly in Europe, the USA and
+Canada) commenced investigations in the past few years, some of which are still ongoing.
+On the basis of its own findings and those of the authorities, the VW Group implemented various measures,
+which differed according to the country in some cases and included hardware and software measures, vehicle
+buybacks and early termination of leases as well as compensation payments to vehicle owners in some instances.
+The hardware and software measures had largely been completed as of the reporting date. The risk provisions
+for the diesel issue mainly include provisions for criminal, administrative and civil proceedings. Furthermore,
+there are legal risks from other criminal and administrative proceedings as well as civil actions, particularly by
+customers and holders of securities.
+The provisions recognized as of 31 December 2021 and the contingent liabilities disclosed in the notes to the
+consolidated financial statements are subject to a significant estimation risk in view of the extensive ongoing
+criminal and administrative investigations and proceedings, the complexity of the different issues, developments
+in court rulings and market conditions for used diesel vehicles. Whether provisions need to be recognized or
+contingent liabilities disclosed for the legal risks from the diesel issue, and in what amount, depends to a large
+extent on the assessments and assumptions made by the executive directors. As described in the notes to the
+consolidated financial statements, the executive directors considered in their assessments in particular the fact
+that, based on the various measures taken and meanwhile largely concluded to resolve the diesel issue, there is
+still no confirmation that members of the Board of Management were aware of any deliberate manipulation of
+the engine control unit software prior to the summer of 2015.
+In light of the significance of the risk provisions and the extent of the assumptions and scope for judgment
+by the executive directors, this matter was a key audit matter.
+Auditor's response
+376
+Independent auditor's report
+Consolidated Financial Statements
+In addition, we reviewed on a sample basis the input factors (quantity and value) of the provisions and contingent
+liabilities for individual matters using statements of claims received, settlement agreements and court judgments.
+With regard to the valuation, we also compared the current assessments by the executive directors with past
+experience, where observable. For significant additions to provisions, we examined whether they were due to
+new matters or to changes in the estimation inputs and obtained corresponding evidence. To analyze significant
+utilizations of the provisions, we obtained an understanding of the procedural controls implemented and
+examined a sample to determine whether they were based on settlement agreements or court judgments and
+whether corresponding payments were made.
+Furthermore, external reports and investigation results were inspected and inquiries were made of the external
+law firm engaged to carry out the investigation, with the assistance of our own forensic specialists, in order to
+understand and assess the special investigation completed in fiscal year 2021 in terms of when former and
+current members of the Board of Management became aware of the diesel issue.
+Our audit procedures did not lead to any reservations relating to the accounting treatment of the risk provisions
+for the diesel issue.
+Reference to related disclosures
+2. Recoverability of goodwill and the acquired brand names
+Obligations to the Board of Management comprise outstanding balances for the annual bonus, the fair values
+of the performance shares granted to Board of Management members, and pension provisions of €81.2 million
+(previous year: €60.9 million).
+Responsibility Statement
+In the reporting period, the Volkswagen Group made capital contributions of €1,323 million (previous year:
+€505 million) to related parties.
+2
+4
+1
+1
+0
+0
+0
+0
+1,139
+872
+1,380
+1,160
+17,474
+17,660
+815
+632
+349
+230
+1,539
+1,332
+1
+1
+4
+1
+0
+0
+1
+0
+1
+4
+6
+Notes to the Consolidated Financial Statements
+369
+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
+subsidiaries 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.
+> 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 in the contribution agreement.
+According to a notification dated January 3, 2022, the State of Lower Saxony and Hannoversche Beteiligungsgesell-
+schaft Niedersachsen mbH, Hanover, held 20.00% of the voting rights of Volkswagen AG on December 31, 2021.
+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).
+370
+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:
+RELATED PARTIES
+€ million
+Porsche SE and its majority interests
+Supervisory Board members
+Board of Management members
+Unconsolidated subsidiaries
+Joint ventures and their majority interests
+Associates and their majority interests
+Pension plans
+Other related parties
+State of Lower Saxony, its majority interests and joint ventures
+€ million
+SUPPLIES AND SERVICES
+RENDERED
+2021
+2020
+SUPPLIES AND SERVICES
+RECEIVED
+As in the previous year, obligations to members of the Supervisory Board and other related parties relate
+primarily to interest-bearing bank balances of Supervisory Board members and other related parties that were
+invested at standard market terms and conditions at Volkswagen Group companies.
+2020
+5
+11
+2021
+7
+12,207
+2,029
+2,312'
+Associates and their majority interests
+533
+397
+965
+951
+Pension plans
+1
+1
+Other related parties
+0
+12,303
+0
+State of Lower Saxony, its majority interests and joint ventures
+232
+227
+2
+2
+1 Prior-year figures adjusted.
+The tables above do not contain the dividend payments (net of withholding tax) of €2,960 million (previous year:
+€3,098 million) received from joint ventures and associates and dividends of €756 million (previous year:
+€756 million) paid to Porsche SE.
+Receivables from joint ventures are primarily attributable to loans granted in an amount of €8,756 million
+(previous year: €8,534 million) as well as trade receivables in an amount of €3,289 million (previous year:
+€3,349 million). Receivables from non-consolidated subsidiaries also result primarily from loans granted in an
+amount of €737 million (previous year: €642 million) as well as trade receivables in an amount of €344 million
+(previous year: €190 million).
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+371
+Impairment losses of €17 million (previous year: €24 million) were recognized on the outstanding related party
+receivables. In the fiscal year, expenses of €1 million (previous year: €14 million) were incurred in this context.
+In addition, the Volkswagen Group has furnished guarantees to external banks on behalf of related parties in
+the amount of €391 million (previous year: €354 million).
+11
+198
+1,477
+49
+1,164
+4
+1,715
+LIABILITIES
+RECEIVABLES FROM
+(INCLUDING OBLIGATIONS) TO
+Dec. 31, 2021
+Dec. 31, 2020
+Dec. 31, 2021
+Dec. 31, 2020
+Supervisory Board members
+Board of Management members
+Unconsolidated subsidiaries
+Joint ventures and their majority interests
+2
+Porsche SE and its majority interests
+4
+68
+90
+0
+167
+252
+0
+0
+0
+0
+1
+1,442
+Group auditor's responsibilities for the assurance work on the ESEF documents
+Evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance
+with the requirements of Arts. 4 and 6 of Commission Delegated Regulation (EU) 2019/815, in the
+version in force at the date of the financial statements, enables an appropriate and complete machine-
+readable XBRL copy of the XHTML rendering.
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material inten-
+tional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional
+judgment and maintain professional skepticism throughout the assurance work. We also:
+Identify and assess the risks of material intentional or unintentional non-compliance with the
+requirements of Sec. 328 (1) HGB, design and perform assurance procedures responsive to those risks,
+and obtain assurance evidence that is sufficient and appropriate to provide a basis for our assurance
+opinion.
+Obtain an understanding of internal control relevant to the assurance on the ESEF documents in order
+to design assurance procedures that are appropriate in the circumstances, but not for the purpose of
+expressing an assurance opinion on the effectiveness of these controls.
+Evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents
+meets the requirements of Commission Delegated Regulation (EU) 2019/815, in the version in force at
+the date of the financial statements, on the technical specification for this file.
+Evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the
+audited consolidated financial statements and to the audited group management report.
+In addition, the executive directors of the Company are responsible for such internal control as they have
+determined necessary to enable the preparation of ESEF documents that are free from material intentional or
+unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the electronic reporting format.
+The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of
+the financial reporting process.
+Other matter - Use of the auditor's report
+We were elected as group auditor by the Annual General Meeting on 22 July 2021. We were engaged by the
+Supervisory Board on 1 September 2021. We have been the group auditor of VOLKSWAGEN AKTIENGESELLSCHAFT
+since fiscal year 2020.
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to
+the Audit Committee pursuant to Art. 11 of the EU Audit Regulation (long-form audit report).
+Our auditor's report must always be read together with the audited consolidated financial statements and the
+audited group management report as well as the assured ESEF documents. The consolidated financial statements
+and the group management report converted to the ESEF format – including the versions to be published in the
+Bundesanzeiger [German Federal Gazette] – are merely electronic renderings of the audited consolidated financial
+statements and the audited group management report and do not take their place. In particular, the ESEF report
+and our assurance opinion contained therein are to be used solely together with the assured ESEF documents
+made available in electronic form.
+The German Public Auditor responsible for the engagement is Martin Matischiok.
+German Public Auditor responsible for the engagement
+The executive directors of the Company are responsible for the preparation of the ESEF documents including the
+electronic rendering of the consolidated financial statements and the group management report in accordance
+with Sec. 328 (1) Sentence 4 No. 1 HGB and for the tagging of the consolidated financial statements in accordance
+with Sec. 328 (1) Sentence 4 No. 2 HGB.
+Further information pursuant to Art. 10 of the EU Audit Regulation
+Responsibilities of the executive directors and the Supervisory Board for the ESEF documents
+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.
+Independent auditor's report
+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 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.
+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.
+Consolidated Financial Statements
+Consolidated Financial Statements
+Independent auditor's report
+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.
+OTHER LEGAL AND REGULATORY REQUIREMENTS
+Report on the assurance on the electronic rendering of the consolidated financial statements and the group management report prepared
+for publication purposes in accordance with Sec. 317 (3a) HGB
+Opinion
+We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about
+whether the rendering of the consolidated financial statements and the group management report (hereinafter
+the "ESEF documents") contained in VWAG_JFB_Konzern_2021-12-31 (SHA-256 checksum: 8d5619f3161fad9
+deca8a14e45fe91403e85622d03959c410c8926dc1d7a905a) and prepared for publication purposes complies in all
+material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting format ("ESEF format").
+In accordance with German legal requirements, this assurance work extends only to the conversion of the infor-
+mation contained in the consolidated financial statements and the group management report into the ESEF for-
+mat and therefore relates neither to the information contained within these renderings nor to any other infor-
+mation contained in the file identified above.
+In our opinion, the rendering of the consolidated financial statements and the group management report
+contained in the file identified above and prepared for publication purposes complies in all material respects
+with the requirements of Sec. 328 (1) HGB for the electronic reporting format. Beyond this assurance opinion and
+our audit opinions on the accompanying consolidated financial statements and the accompanying group
+management report for the fiscal year from 1 January to 31 December 2021 contained in the “Report on the audit
+of the consolidated financial statements and of the group management report" above, we do not express any
+assurance opinion on the information contained within these renderings or on the other information contained
+in the file identified above.
+Basis for the opinion
+We conducted our assurance work on the rendering of the consolidated financial statements and the group
+management report contained in the file identified above in accordance with Sec. 317 (3a) HGB and the IDW
+Assurance Standard: Assurance on the Electronic Rendering of Financial Statements and Management Reports
+Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410) (10.2021). Our responsibility
+in accordance therewith is further described in the “Group auditor's responsibilities for the assurance work on
+the ESEF documents" section. Our audit firm applies the IDW Standard on Quality Management 1: Requirements
+for Quality Management in the Audit Firm (IDW QS 1).
+386
+Consolidated Financial Statements
+APPENDIX TO THE AUDITOR'S REPORT:
+We have audited the attached remuneration report of VOLKSWAGEN AKTIENGESELLSCHAFT, Wolfsburg,
+prepared to comply with Sec. 162 AktG ["Aktiengesetz”: German Stock Corporation Act] for the fiscal year
+from 1 January to 31 December 2021 and the related disclosures.
+1. Parts of the group management report whose content is unaudited
+Wirtschaftsprüfer
+[German Public Auditor]
+Matischiok
+Wirtschaftsprüfer
+[German Public Auditor]
+388
+Independent auditor's report on the remuneration report
+Independent auditor's report
+on the remuneration report
+TO VOLKSWAGEN AKTIENGESELLSCHAFT
+Responsibilities of the executive directors and the Supervisory Board
+The executive directors and the Supervisory Board of VOLKSWAGEN AKTIENGESELLSCHAFT are responsible for
+the preparation of the remuneration report and the related disclosures in compliance with the requirements of
+Sec. 162 AktG. In addition, the executive directors and the Supervisory Board are responsible for such internal
+control as they determine is necessary to enable the preparation of a remuneration report and the related
+disclosures that are free from material misstatement, whether due to fraud or error.
+Auditor's responsibility
+Our responsibility is to express an opinion on this remuneration report and the related disclosures based on our
+audit. We conducted our audit in compliance with German Generally Accepted Standards for Financial State-
+ment Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
+Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
+reasonable assurance about whether the remuneration report and the related disclosures are free from material
+misstatement.
+An audit involves performing procedures to obtain audit evidence about the amounts in the remuneration
+report and the related disclosures. The procedures selected depend on the auditor's judgment, including the
+assessment of the risks of material misstatement of the remuneration report and the related disclosures,
+whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
+to the preparation of the remuneration report and the related disclosures in order to plan and perform audit
+procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
+effectiveness of the entity's internal control. An audit also includes evaluating the accounting policies used and
+the reasonableness of accounting estimates made by the executive directors and the Supervisory Board, as well
+as evaluating the overall presentation of the remuneration report and the related disclosures.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
+activities within the Group to express 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.
+We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+Meyer
+Independent auditor's report 387
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+The group management report contains other cross-references to webpages of the Group. We have not audited
+the content of the information to which these cross-references refer.
+We have not audited the content of the following part of the group management report:
+•
+The group corporate governance declaration which is published on the website stated in the group
+management report and is part of the group management report.
+2. Further other information
+The other information comprises the following parts of the annual report, of which we obtained a copy prior to
+issuing this auditor's report:
+The Group Non-Financial Report
+The other information also comprises other parts to be included in the annual report, of which we obtained a
+copy prior to issuing this auditor's report, in particular the sections:
+To our Shareholders
+Divisions
+Group Corporate Governance Declaration
+Remuneration Report
+Responsibility Statement; and
+Additional Information
+but not the consolidated financial statements, not the group management report disclosures whose content is
+audited and not our auditor's report thereon.
+3. Company information outside of the annual report referenced in the group management report
+Hanover, 11 March 2022
+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 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.
+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
+Sec. 315e (1) HGB.
+385
+Obtain an understanding of internal control relevant to the audit of the consolidated financial state-
+ments 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 opinion on the effectiveness of these systems.
+The lease assets balance sheet item comprises vehicles under current leases. There is an impairment risk for these
+vehicles which is primarily dependent on the residual value expected at the end of the lease.
+Reasons why the matter was determined to be a key audit matter
+5. Calculation of the expected residual values of lease assets during impairment testing
+Independent auditor's report 381
+Consolidated Financial Statements
+With regard to the recognition and measurement policies applied in accounting for provisions for warranty
+obligations, refer to the disclosures in the "Accounting policies" section on estimates and assessments by
+management and note 30, “Noncurrent and current other provisions" in the "Balance Sheet disclosures" section of
+the notes to the consolidated financial statements.
+Reference to related disclosures
+Our audit procedures did not lead to any reservations relating to the completeness and valuation of provisions
+for warranty obligations.
+For significant individual technical risks, we assessed the expected incidence of technical faults and the
+calculation of expected costs per claim/vehicle using documentation on previous claims, inspecting resolutions
+passed by technical committees and holding discussions with the departments responsible.
+In light of the uncertainty in relation to the estimated future warranty costs, we assessed the underlying valuation
+assumptions, especially the expected claim rate per vehicle and the cost thereof, using analyses of historical data.
+Where there was a lack of past experience, we obtained an understanding of the assumptions made by the
+executive directors and tested their plausibility using historical data for comparable items. Using the calculation
+bases derived from these historical data, we checked the estimated costs for expected claims per vehicle. To assess
+the completeness of the provisions, we also reconciled the number of sold vehicles used to recognize the
+provision with the sales volumes. We obtained an understanding of the method used for calculating the provisions,
+including the discounting, and reperformed the calculations.
+With regard to the accounting for the provisions for warranty obligations, we examined the underlying processes
+for recording previous claims, calculating and valuing the estimated future warranty costs and recognizing the
+provisions, and tested controls in some areas.
+Auditor's response
+Evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness
+of estimates made by the executive directors and related disclosures.
+Obligations for warranty claims are calculated on the basis of estimated warranty costs and ex gratia arrange-
+ments. Where unusual individual technical risks are anticipated, an individual assessment is made whether and,
+if so, to what extent measures are required to remediate them and provisions need to be recognized.
+Internal and external marketing results as well as estimates of future market price development are used to
+review the expected residual value in a quarterly impairment test.
+Reasons why the matter was determined to be a key audit matter
+Consolidated Financial Statements
+Independent auditor's report
+380
+With regard to the recognition and measurement policies applied for capitalized development costs, refer to the
+disclosure on intangible assets in the "Accounting policies” section of the notes to the consolidated financial
+statements. For the related disclosures on judgments by the executive directors and sources of estimation
+uncertainty as well as the disclosures on capitalized development costs, refer to the disclosures in the "Accounting
+policies" section on estimates and assumptions by management and note 12, "Intangible assets" in the "Balance
+Sheet disclosures" section of the notes to the consolidated financial statements.
+Reference to related disclosures
+Our procedures did not lead to any reservations relating to the recognition and recoverability of the capitalized
+development costs.
+We also assessed the sensitivity analyses performed by the executive directors in order to estimate any
+potential impairment risk associated with a reasonably possible change in one of the significant assumptions
+used in the valuation.
+With respect to the rollforward from the medium-term plan to the long-term forecast, we assessed the plausibility
+of the assumed growth rates by comparing them with observable data. To assess the discount rates and growth
+rates applied, we analyzed the inputs used to determine them on the basis of publicly available information and
+obtained an understanding of the methods used with regard to the relevant requirements of IAS 36.
+We analyzed the planning process established in the VW Group and tested the operating effectiveness of the
+controls implemented in the planning process. As a starting point, we compared the VW Group's five-year
+operational plan prepared by the executive directors and acknowledged by the Supervisory Board with the fore-
+cast figures in the underlying impairment tests. We discussed with the executive directors the key planning
+assumptions for a sample we selected of brands with significant capitalized development costs and compared
+them with past earnings and cash inflows to assess the planning accuracy. We based plausibility testing of the inputs
+for the impairment tests among other things on a comparison with general and industry-specific market expec-
+tations underlying the expected cash inflows. We discussed with the executive directors the effects of the Covid-19
+pandemic and the semiconductor supply shortages on the development of cash inflows in the individual cash-
+generating units and compared them with current market expectations. We also investigated the expectations
+regarding the development of market shares for battery electric vehicles and the effects on the planned invest-
+ments and their indirect effects on the long-term cash inflows expected by the executive directors.
+Moreover, we involved valuation specialists to assess among other things the methodology used to determine
+the relevant cash-generating units and perform the impairment tests in light of the provisions of IAS 36. We also
+checked the arithmetical accuracy of the valuation models used.
+During our audit, we examined the process for identifying the research and development costs, particularly with
+reference to the criteria for capitalization. In this connection, we carried out analytical audit procedures such as
+comparisons of project budgets and capitalization rates, inspected documentation on project feasibility and
+tested process-related controls in some areas. We also assessed the future economic benefit criterion for
+capitalization based on the assumptions regarding the cash inflows of the cash-generating unit to which the
+capitalized development work is allocated.
+Auditor's response
+Independent auditor's report 379
+Consolidated Financial Statements
+4. Completeness and measurement of provisions for warranty obligations
+As it is not possible to make a conclusive assessment of the impact of the ongoing global Covid-19 pandemic
+and given the semiconductor supply shortages, the estimation uncertainty in relation to the calculation of the
+expected residual values remains significantly heightened in fiscal year 2021.
+The amount of provisions for warranty claims is significant overall. Besides the general use of judgment in
+selecting the valuation methods and assessing the obligations, increasing estimation uncertainty stems from
+the growing proportion of hybrid and battery electric vehicles entering the market and a lack of experience of
+their susceptibility to faults. In light of the amount of the provisions and the judgment exercised during
+valuation, the completeness and measurement of provisions for warranty obligations was a key audit matter.
+Auditor's response
+In light of the judgment exercised in calculating the residual values, the existing estimation uncertainty in
+impairment testing and the significance of the amount of lease assets, the calculation of expected residual values
+was a key audit matter.
+Consolidated Financial Statements
+Independent auditor's report
+384
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
+with Sec. 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.
+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 opinions on the consolidated financial statements and on 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.
+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.
+Independent auditor's report 383
+Consolidated Financial Statements
+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.
+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 Sec. 315e (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.
+report
+Responsibilities of the executive directors and the Supervisory Board for the consolidated financial statements and the group management
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+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 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.
+.
+is materially inconsistent with the consolidated financial statements, with the group management
+report or our knowledge obtained in the audit, or
+otherwise appears to be materially misstated.
+Our audit procedures did not lead to any reservations relating to the calculation of the expected residual
+values of the lease assets during impairment testing.
+Reference to related disclosures
+With regard to the recognition and measurement policies applied for lease assets, refer to the disclosure on
+intangible assets in the “Accounting policies” section of the notes to the consolidated financial statements.
+For the related disclosures on judgments by the executive directors and sources of estimation uncertainty,
+refer to the disclosures in the "Accounting policies" section on estimates and assumptions by management"
+and note 14, "Lease assets and investment property" in the "Balance Sheet disclosures" section of the notes to
+the consolidated financial statements.
+382
+Independent auditor's report
+During our audit, we analyzed the process implemented for calculating and monitoring the residual values to
+identify any risks of material misstatement and obtained an understanding of the process steps and controls.
+On this basis, we tested at significant components the operating effectiveness of the implemented controls
+over the calculation and monitoring of the expected residual values. To assess the forecasting models used to
+calculate the residual values, we assessed the validation plans on the basis of the respective model designs to
+determine whether the validation procedures described in the plans allow an assessment of the models' forecast
+quality. We investigated whether the validation procedures performed according to the validation plans and the
+backtesting performed led to any indications of model weaknesses or any need to adjust the models. Further-
+more, we assessed whether the assumptions underlying the forecasting model and the inputs used for calculating
+the expected residual values were clearly documented. To this end, we obtained evidence for the main inputs and
+assumptions used for mileage, age and lifecycle phase of the vehicles to calculate the residual values and
+examined them for currentness and transparency. We assessed whether the marketing assumptions used reflect
+industry-specific and general market expectations as well as, in particular, current marketing results.
+EMPHASIS OF MATTER PARAGRAPH - IMMANENT RISK DUE TO UNCERTAINTIES REGARDING THE LEGAL CONFORMITY OF
+THE INTERPRETATION OF THE EU TAXONOMY REGULATION
+We draw attention to the executive directors' comments on the EU Taxonomy disclosures in the “EU Taxonomy"
+section of the group management report, where it is stated that the EU Taxonomy Regulation and the Delegated
+Acts adopted thereunder contain wording and terms that are still subject to interpretation uncertainties and for
+which clarifications have not yet been published in every case. The executive directors describe how they inter-
+preted the EU Taxonomy Regulation and the Delegated Acts adopted thereunder. Due to the immanent risk that
+undefined legal terms may be interpreted differently, the legal conformity of the interpretation is subject to uncer-
+tainties. Our opinion on the group management report is not modified in this respect.
+OTHER INFORMATION
+The Supervisory Board is responsible for the Report of the Supervisory Board. The executive directors and the
+Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG [“Aktiengesetz”: German Stock
+Corporation Act] on the German Corporate Governance Code, which is part of the group corporate governance
+declaration, and for the remuneration report pursuant to Sec. 162 AktG. In all other respects, the executive directors
+are responsible for the other information. The other information comprises the parts of the annual report listed
+in the appendix to the auditor's report.
+Our 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 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
+Consolidated Financial Statements
+2021
+2020
+%
+Transporter
+80,122
+360
+Deliveries (thousand units)
+372
+-3.2
+Caravelle/Multivan, Kombi, California
+VOLKSWAGEN COMMERCIAL VEHICLES BRAND
+79,379
+66,357
+29
+Divisions
+2020
+2021
+Units
+PRODUCTION
+Divisions
+71,813
+BEVS delivered in China
+92.7 thousand
+For the tech-savvy Chinese market, CARIAD has set out an ambitious growth plan for software and
+connectivity in China. A strategic road map for business in China between now and 2030 has also been defined,
+concentrating on innovation and strong local research and development. In future, the aim is to be able to
+more quickly offer products and services specially developed for Chinese customers and their needs. The focus
+will be on technology for connectivity and automated driving.
+In September 2021, the first premium vehicle from SAIC Audi rolled off the production line: the A7 L. This
+opened a new chapter in China for the brand with the four rings and further strengthened the proven, almost
+four-decades-old partnership between Volkswagen Group China and SAIC Motor. With SAIC VOLKSWAGEN and
+FAW-Volkswagen, Audi will further expand its leading role in China.
+In fiscal year 2021, Volkswagen laid the ground for continued future success in China: Volkswagen Anhui,
+the first majority-owned joint venture in China, will be the Group's new e-mobility hub and our third MEB
+plant in China after Foshan and Anting. Another strategic step in 2021 was the establishment of VW Anhui
+Components Company, the first battery system plant to be owned by the Group in China.
+The fully electric vehicle (BEV) segment was the fastest growing segment in China in 2021. Despite early
+challenges, the Group's electrification strategy in China gained further momentum with the introduction of ten
+new NEV models, including seven BEVs. At 92.7 thousand vehicles, the number of BEVS delivered was more than
+four times the figure for 2020. This was primarily due to the new ID. models ID.3, ID.4 X and ID.4 CROZZ and to
+the ID.6 X and ID.6 CROZZ developed specially for the Chinese market. Customer communication was improved
+specifically for the ID. family and an agency-based sales model introduced along with a fully digitalized sales
+process, which is being very well received by Chinese customers.
+The challenges of the Covid-19 pandemic and the shortage of semiconductors led to a fall in deliveries in the
+Volkswagen Group's largest single market, despite high customer demand and full order books. Together with
+the Chinese joint ventures, Volkswagen Group China delivered 3.3 million vehicles (including imports) in the
+Chinese market in 2021 (-14.1%). While the volume brands were appreciably affected by the shortage of semi-
+conductors, Porsche (+7.5%), Bentley (+40.0%) and Lamborghini (+54.8%) achieved new sales records. Audi sold
+701 thousand vehicles on the Chinese market, with imported models up 53.9%. The Volkswagen Passenger Cars
+brand, including JETTA, delivered 2.4 million vehicles and, with a market share of 11.7%, remained the number
+one with Chinese customers despite the challenging environment. The Volkswagen Group maintained its mar-
+ket leadership in China with a market share of 16%.
+BUSINESS DEVELOPMENT
+Volkswagen Commercial Vehicles
+Vehicle sales
+Despite the challenges due to the Covid-19 pandemic and the semiconductor shortage,
+the Volkswagen Group defended its leading position in China in 2021 and further
+accelerated the shift to e-mobility.
+345
+Vehicle sales
+78,490
+76,506
+Macan
++10.9
+272
+302
+Deliveries (thousand units)
+82,137
+78,850
+297
+Cayenne
+2020
+2021
+35
+Porsche
+PORSCHE AUTOMOTIVE¹
+2020
+2021
+Units
+PRODUCTION
+Divisions
+%
+Divisions
+265
+911 Coupe/Cabriolet
+5,006
+special items
+22,655
+18,472
+718 Boxster/Cayman
+Operating result before
+21,832
+33,233
+Panamera
++16.1
++12.1
+26,086
+Sales revenue (€ million)
+326
+37,720
+Taycan
++7.6
+263
+283
+Production
+28,672
+38,347
+30,289
+4,021
+Increase in earnings
+Porsche Automotive generated sales revenue of €30.3 (26.1) billion in fiscal year 2021. At €5.0 billion, the
+operating result before special items was clearly better than in the previous year (+24.5%). Positive volume and
+mix effects more than offset the unfavorable exchange rate trends, increased product costs due to higher
+commodity prices and a rise in fixed costs attributable to strategy and growth. The operating return on sales
+before special items improved to 16.5 (15.4)%. The diesel issue gave rise to low positive special items.
++38.9
+2,049
+2,845
+Sales revenue (€ million)
+1,244
+1,972
+Continental GT Convertible
++38.3
+10,693
+14,788
+Mulsanne
+Production
+3,031
+Continental GT Coupé
++29.2
+11,296
+14,594
+Vehicle sales
+3,381
+3,947
+Flying Spur
++30.8
+1,995
+24.5%
+127
+389
+SALES REVENUE AND EARNINGS
+Porsche produced a total of 283 thousand vehicles in 2021, 7.6% more than in fiscal year 2020.
+Porsche's unit sales amounted to 297 thousand vehicles in the reporting year. This was 12.1% more than in
+the previous year. Demand was high for the 911 and the Taycan; the Macan and Panamera models were also
+popular with customers.
+In the reporting period, Porsche delivered 302 thousand sports cars to customers, an increase of 10.9%
+versus the previous year. In China, which remained the largest single market for Porsche, sales were up by 7.5%.
+In the USA, an increase of 22.2% was recorded.
+Exclusivity and social acceptance, pioneering spirit and tradition, performance and sustainability, design and
+functionality – these are the brand values of the sports car manufacturer Porsche. Porsche continued on its
+path toward sustainable mobility in fiscal year 2021 and presented another derivative in the all-electric sports
+car segment: the Taycan Cross Turismo. The high-tech chassis with all-wheel drive and adaptive air suspension
+also ensures uncompromising dynamics when driving offroad. It has a range of up to 456 km. The 560 kW
+(761 PS) of power generated by the overboost function on the top-of-the-range model, the Taycan Turbo S Cross
+Turismo, underscores the all-rounder's uncompromising dynamics on and offroad. The Taycan Turbo S Cross
+Turismo sprints from 0 to 100 km/h in under 2.9 seconds. Porsche also launched its new Macan with enhanced
+performance, modified design and a new control interface. The popular compact SUV's visuals have been
+further sharpened with a series of targeted changes. The chassis has also been optimized further, which means
+that the Macan now responds even more sensitively and directly to the driving situation and road conditions.
+The new Porsche Macan offers a significantly enhanced interior with a modern and elegantly designed center
+console, touch surfaces instead of tactile buttons and many online functions as standard. These can be
+controlled via the 10.9-inch full HD touch display or by using voice commands. The development center in
+Weissach celebrated its 50th anniversary in the reporting year. From the first drawing to the finished prototype,
+Weissach is where vehicles are developed, tested and readied for series production. Since it opened 50 years ago,
+the center has stood for innovative vehicle solutions, intelligent development work and shaping the mobility of
+today and tomorrow.
+BUSINESS DEVELOPMENT
+Porsche added the Cross Turismo to its all-electric Taycan model range in 2021.
+The new generation of the Macan arrived on the market with enhanced performance,
+modified design and a new control interface. Sales revenue and earnings increased.
+PORSCHE
+Porsche
+34
+Operating result
+FURTHER INFORMATION www.bentleymotors.com
+DC21 BVM
+DELIVERIES BY MARKET
+in percent
+Flying Spur
+1.0
+13.7
+Operating return on sales (%)
+10,693
+14,788
+X
+20
+Europe/Other Markets 32.2%
+North America 28.7%
+South America 0.0%
+Asia-Pacific 39.0%
+11,206
++24.5
+263,236
+Buses
+23,267
+Trucks
+28,669
+Navistar
+18,340
+21,163
+Light Commercial Vehicles
+5,634
+4,240
+5,402
+Buses
+64,883
+Trucks
+190,187
+271,210
+81,352
+90,286
+MAN
+17,635
+22,202
+Light Commercial Vehicles
+57,378
+5,430
+Volkswagen Caminhões e Ônibus
+37,478
+Volkswagen Group China
+Volkswagen Group China
+38
+37
+FURTHER INFORMATION www.traton.com
+4.5%
+Asia-Pacific
+Europe/Other Markets 55.1%
+North America 11.8%
+South America 28.7%
+i
+in percent
+57,095
+DELIVERIES BY MARKET
+Strong brands
+191,366
+268,768
+TRATON
+5,665
+4,405
+Buses
+31,813
+52,690
+Trucks
+MAN
+283,128
+3,190
+16,174
+In 2021, with the full takeover of the US commercial vehicle manufacturer Navistar, TRATON took an impor-
+tant step in opening up new sources of revenue and new markets. TRATON is also increasing its focus on Asia:
+Scania is set to be the first Western truck manufacturer with its own production in China; an important step for
+the TRATON GROUP.
+Since November 2021, the TRATON GROUP has participated in the UN Global Compact, the world's largest
+and most important initiative for sustainable and responsible corporate governance. Environmentally con-
+scious business practices and respect for human rights are essential to making globalization socially and
+economically beneficial. The TRATON GROUP has committed to this as a member of the UN Global Compact.
+For the TRATON GROUP, the future of transport is electric. To allow it to assume a leading role in e-mobility,
+TRATON is putting a total of €2.6 billion into research and development from 2021 to 2026, while scaling back
+investment in conventional drive systems. The success of e-mobility will depend on reliable infrastructure.
+With the planned establishment, agreed in 2021, of a joint venture between the TRATON GROUP, Daimler Truck
+and the Volvo Group, TRATON is making a contribution to battery-electric transport. The joint venture will
+create a high-performance charging infrastructure for trucks across Europe.
+Climate change, the growing importance of sustainability, decarbonization and digitalization are presenting
+TRATON with new challenges. However, they also offer new opportunities. The new “TRATON Way Forward"
+strategy, presented for the first time at the TRATON SE virtual Annual General Meeting in 2021, focuses on three
+themes: responsible company, value creation and TRATON Accelerated!
+Since July 1, 2021, the US commercial vehicle manufacturer Navistar has been a TRATON GROUP brand. With its
+MAN, Scania, Navistar, Volkswagen Caminhões e Ônibus and RIO brands, TRATON aims to become a global
+champion of the commercial vehicle industry and drive the transformation of the logistics sector.
+BUSINESS DEVELOPMENT
+In 2021, the TRATON GROUP achieved considerable milestones on its
+way to becoming a global champion. The merger with Navistar
+has opened access to the important North American market.
+GROUP
+TRATON
+TRATON GROUP
+After the successful squeeze-out of the noncontrolling interest shareholders of MAN SE, who received an
+appropriate cash settlement, MAN SE was merged into TRATON SE and delisted. As a result of the merger,
+particularly MAN Truck & Bus SE and Scania AB have become wholly owned direct subsidiaries of TRATON SE,
+enabling TRATON to create a more efficient overall structure for itself.
+36
+North America 26.6%
+South America 1.4%
+Asia-Pacific 41.0%
+Europe/Other Markets 30.9%
+C
+DELIVERIES BY MARKET
+in percent
+1 Porsche (Automotive and Financial Services): sales revenue €33,138 (28,695) million,
+operating profit before special items €5,286 (4,176) million.
+S GO 6203
+Macan
+15.4
+16.5
+Operating return on sales (%)
+FURTHER INFORMATION www.porsche.com
+Buses
+Focusing on logistics and digitalization, TRATON plans to establish new business models as well as part-
+nerships that add value to the Group. The reporting year saw the start of test runs for autonomous driving in
+Sweden: these involve a self-driving vehicle operating along a selected stretch of highway at Level 4 (high auto-
+mation) of the total five levels of automation and therefore almost autonomously. However, a driver remains
+on board for safety reasons.
+For e-mobility from 2021 to 2026
+18,857
+Buses
+67,106
+89,528
+Trucks
+156,378
+230,151
+Trucks
+72,536
+92,718
+€2.6 billion
+Scania
+2021
+TRATON GROUP
+Units
+2020
+2021
+DELIVERIES
+Units
+PRODUCTION
+Divisions
+Divisions
+2020
+14,659
+29,450
+3,946
+1,681
+Audi
+275,888
+279,712
+Q5
+-0.7
+1,700
+1,689
+Deliveries (thousand units)
+Audi
+1,693
+%
+2021
+31
+Audi
+AUDI BRAND
+2020
+2021
+Units
+PRODUCTION
+Divisions
+Divisions
+2020
+Operating result
+-0.7
+250,852
+206,482
+164,299
+A3
+-5.0
+1,663
+1,580
+Production
+243,566
+199,628
+A4
+Q3
+-0.7
+1,009
+Vehicle sales
+271,679
+227,237
+A6
++13.1
+7
+8
+Lamborghini
+219,662
+1,017
+Sales revenue (€ million)
+€5.5 billion
+SALES REVENUE AND EARNINGS
+Caddy, Caddy California
+-454
+73
+Operating result
+61,998
+40,156
+Caddy Kombi
++5.9
+Deliveries (units)
+9,909
+33,805
+Sales revenue (€ million)
+42,755
+Amarok
+-2.5
+344
+335
+Production
+58,235
+58,739
+Crafter, Grand California
+-5.6
+36,343
+Sales revenue by the Audi brand in fiscal year 2021 amounted to €53.1 (50.0) billion. The operating result before
+special items more than doubled to €5.5 (2.7) billion. This was due to positive effects from margins, the
+remeasurement of commodities, exchange rates effects and fixed-cost discipline. The operating return on sales
+before special items climbed to 10.5 (5.5)%. The diesel issue resulted in low negative special items (previous
+year: €-0.2 billion). The financial key performance indicators for the Lamborghini and Ducati brands are
+included in the financial figures for the Audi brand.
+48,799
+0.7
+In 2021, Audi produced 1.6 (1.7) million units worldwide. Lamborghini manufactured 8,303 (7,250) vehicles.
+The Audi brand's unit sales in the reporting year stood at 1.0 (1.0) million vehicles. The Chinese joint
+venture FAW-Volkswagen sold a further 644 (656) thousand locally produced Audi vehicles. The Q3, Q5, Q7, Q8
+and A5 series were in especially strong demand, and the new Q4 e-tron was also very popular. Unit sales at
+Automobili Lamborghini S.p.A. amounted to 8,315 (7,460) vehicles.
+In a difficult market environment, the Audi brand delivered a total of 1.7 (1.7) million vehicles to customers
+in 2021. Increases were recorded in the United Kingdom (+9.4%), Italy (+9.9%), France (+10.2%) and the United
+States (+5.0%).
+"Vorsprung" is Audi's global brand promise, and one which means the brand with the four rings is consistently
+focusing on the premium mobility of the future: connected, sustainable, electric, and autonomous. In
+developing innovative technologies, Audi plays a leading role within the Group, not least with the Premium
+Platform Electric (PPE) for all-electric premium vehicles. Audi continued to forge ahead with its electrification
+campaign in the reporting year and led the way with the presentation of the e-tron GT. The four-door coupé,
+which also comes in an RS model, reinterprets the traditional Gran Turismo concept. The Q4 e-tron and
+Q4 Sportback e-tron are playing a pivotal role in the electrification strategy as Audi's first purely electric
+vehicles in the compact segment. Beneath the expressively designed bodywork, both SUVS offer a large interior,
+excellent everyday practicality and strong charging and driving performance. Depending on the powertrain
+chosen, they offer a range of over 500 km. The optional augmented reality head-up display brings a ground-
+breaking operating innovation into the cockpit. In 2021, Audi also presented impressive concept cars: with the
+A6 e-tron concept showcar, Audi revealed what an electric car could look like when based on the Premium
+Platform Electric (PPE) architecture. The concept vehicles Audi skysphere and Audi grandsphere give an insight
+into how the Audi brand plans to shape the future of the premium segment, particularly with new interior
+designs and a holistic digital ecosystem.
+BUSINESS DEVELOPMENT
+The Audi brand aspires to spearhead the Group both technically and technologically.
+With the Q4 e-tron and e-tron GT series, Audi advanced its electrification campaign in
+the reporting year.
+Audi
+Audi
+30
+i FURTHER INFORMATION www.volkswagen-commercial-vehicles.com
+Operating return on sales (%)
+4.9%
+Asia-Pacific
+North America 1.3%
+South America
+Europe/Other Markets 84.7%
+in percent
+DELIVERIES BY MARKET
+H.NV 527E
+Multivan PHEV
+343,545
+334,956
+-4.9
+9.2%
+53,068
+9,358
++6.2
+32
+FURTHER INFORMATION www.audi.com
+46.2%
+Europe/Other Markets 38.9%
+North America 14.0%
+South America 0.8%
+Asia-Pacific
+О
+in percent
+DELIVERIES BY MARKET
+IN Q4002E
+44,827
+59,214
+Bentley
+1,663,171
+Q4 e-tron
+Ducati, motorcycles
+Audi brand
+7,250
+8,303
+281
+218
+Aventador Coupé
+595
+410
+1,580,322
+Aventador Roadster
+8
+BENTLEY
+BUSINESS DEVELOPMENT
+49,973
+5,838
+Bentayga
+%
+2020
+2021
+33
+Bentley
+2020
+2021
+Bentley celebrated 70 years of Bentley Design in 2021. The brand continued
+its electrification with the Flying Spur Hybrid. The new generation of the
+GT Speed was launched in the Continental model range.
+Units
+Divisions
+Divisions
+Bentley Design
+70 years
+In 2021, Bentley's sales revenue increased by 38.9% year-on-year to €2.8 billion. The operating result improved
+to €389 (20) million. The increase compared with the prior-year figure, which had been impacted by one-off
+expenses for restructuring measures, was largely attributable to higher volumes and improved pricing. The
+operating return on sales increased to 13.7 (1.0)%.
+SALES REVENUE AND EARNINGS
+The Bentley brand produced 14,788 vehicles in the reporting period, 38.3% more than in the previous year.
+Bentley sold 14,594 (11,296) vehicles worldwide in fiscal year 2021; the Continental GT Coupé and Bentayga
+were particularly popular with customers.
+Deliveries by the Bentley brand increased by 30.8% in 2021 to 14,659 vehicles, a new record figure. Sales
+experienced particularly strong growth in the USA (+36.9%) and China (+40.0%).
+The Bentley brand is defined by exclusivity, elegance and power. The British brand had reason to celebrate in
+the reporting year, when Bentley Design turned 70. The design department in Crewe has been giving the brand
+its unmistakable DNA since 1951, creating successful models and true icons. The next chapter for Bentley
+Design will be the first purely battery electric model, another unique product in the making. In fiscal year 2021,
+Bentley took a further step on its way to becoming an end-to-end net-carbon-neutral company, adding the
+Flying Spur to its range of hybrid models on its journey to electrification. The saloon's new drivetrain delivers
+the customary luxury and familiar performance of a Flying Spur. A V6 petrol engine and state-of-the-art electric
+motor combine to generate a system power output of 400 kW (544 PS). The Flying Spur Hybrid can cover more
+than 40 km in fully electric mode, and has a total range of over 700 km. The driver receives additional infor-
+mation on the hybrid drive via the head-up display, the infotainment screen and the instrument cluster.
+Bentley also presented the new generation of the GT Speed and GT Speed Convertible in its Continental range in
+2021. The GT Speed is the most dynamic vehicle in Bentley's 101-year history and is also the brand's most
+performance-oriented interpretation of a luxury grand tourer. It is fitted with a 485 kW (659 PS) 6.0-liter
+W12 TSI engine, enabling a sprint from 0 to 100 km/h in 3.6 seconds and a top speed of 335 km/h. Spear-
+heading the Bentley brand, the two models offer an impressive exterior and a luxurious interior with high-
+quality materials.
+PRODUCTION
+752
+BENTLEY BRAND
+Huracán Spyder
+43,157
+54,564
+e-tron, e-tron GT
+65,574
+56,600
+Q7
+5.5
+10.5
+Operating return on sales (%)
+62,099
+Q8
+60,158
+2,739
+5,546
+special items
+56,786
+64,012
+Operating result before
+124,346
+103,046
+682
+Q2
+A1
+35,406
+A5
+Q4 e-tron
+37,845
+Huracán Coupé
+4,364
+1,753
+1,258
+Urus
+Lamborghini
+1,655,921
+1,572,019
+1,517
+1,679
+5,240
+R8
+A8
+20,591
+AZ
+16,533
+22,285
+TT
+8,489
+8,646
+18,083
+27,519
+Administrative expenses
+1,682
+-10,420
+-9,399
+-9,767
+-8,819
+-8,126
+Net other operating result
+Operating result
+-1,437
+-3,100
+-745
+Financial result
+19,275
+9,675
+16,960
+13,920
+13,818
+-1,466
+-20,859
+47,241
+-20,978
+Income Statement
+Sales revenue
+851
+Cost of sales
+250,200
+222,884
+-202,959
+-183,937
+252,632
+-203,490
+235,849
+-189,500
+229,550
+-186,001
+Gross profit
+38,947
+49,142
+46,350
+43,549
+Distribution expenses
+-19,228
+-18,407
+-20,510
+1,991
+40,516
+1,723
+38,950
+Balance Sheet (at December 31)
+Noncurrent assets
+328,261
+302,170
+300,608
+274,620
+262,081
+41,158
+Current assets
+194,944
+187,463
+183,536
+160,112
+Total assets
+528,609
+Financial Data (in € million)
+497,114
+200,347
+42,913
+43,677
+Personnel expenses
+-146
+Earnings before tax
+20,126
+11,667
+18,356
+15,643
+13,673
+Income tax expense
+-4,698
+-2,843
+-4,326
+-3,489
+-2,210
+Earnings after tax
+15,428
+8,824
+14,029
+12,153
+11,463
+1,396
+350
+8,576
+373
+Glossary
+.
+•
+•
+Additional Information
+Five-Year Review
+Five-Year Review
+391
+Scheduled Dates
+2021
+2019
+2018
+2017¹
+Volume Data (thousands)
+Vehicle sales (units)
+Germany
+9,157
+10,956
+2020
+395
+393
+392
+488,071
+Independent auditor's report on the remuneration report 389
+Opinion
+In our opinion, on the basis of the knowledge obtained in the audit, the remuneration report for the fiscal year
+from 1 January to 31 December 2021 and the related disclosures comply, in all material respects, with the
+financial reporting provisions of Sec. 162 AktG.
+Other matter - formal audit of the remuneration report
+The audit of the content of the remuneration report described in this auditor's report comprises the formal audit
+of the remuneration report required by Sec. 162 (3) AktG and the issue of a report on this audit. As we are issuing
+an unqualified opinion on the audit of the content of the remuneration report, this also includes the opinion
+that the disclosures pursuant to Sec. 162 (1) and (2) AktG are made in the remuneration report in all material
+respects.
+Limitation of liability
+The “General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public
+Auditors and Public Audit Firms]" as issued by the IDW on 1 January 2017 are applicable to this engagement and
+also govern our responsibility and liability to third parties in the context of this engagement
+(www.de.ey.com/general-engagement-terms).
+Hanover, 11 March 2022
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+Matischiok
+Wirtschaftsprüfer
+[German Public Auditor]
+Hantke
+Wirtschaftsprüfer
+[German Public Auditor]
+•
+ADDITIONAL INFORMATION
+Five-Year Review
+Financial Key Performance Indicators
+391
+10,900
+10,777
+973
+1,108
+7,267
+8,712
+8,715
+8,296
+Employees (yearly average)
+668
+665
+668
+656
+634
+Germany
+294
+295
+295
+291
+285
+Abroad
+373
+370
+6,800
+365
+Abroad
+2,303
+1,347
+1,236
+1,264
+Abroad
+7,603
+8,049
+9,609
+9,664
+9,513
+Production (units)
+8,283
+8,900
+10,823
+11,018
+10,875
+Germany
+1,483
+1,633
+2,112
+2,579
+458,156
+2018
+Equity
+•
+•
+•
+•
+•
+•
+•
+.
+•
+•
+PUBLISHED BY
+Volkswagen AG
+Group Financial Publications
+Letterbox 1848
+38436 Wolfsburg, Germany
+Phone +49 (0) 5361 9-0
+Fax +49 (0) 5361 9-28282
+Interim Report January - September 2022
+OCTOBER 27
+Half-Yearly Financial Report 2022
+JULY 28
+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.
+Return on sales before tax
+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.
+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.
+Return on equity before tax
+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.
+This annual report is published in English
+Additional Information
+MARCH 15
+Volkswagen AG Annual Media Conference
+and Investor Conference
+MAY 4
+Interim Report January - March 2022
+MAY 12
+Volkswagen AG Annual General Meeting
+SCHEDULED DATES 2022
+and German. Both versions of the report are
+available on the Internet at
+www.volkswagenag.com/ir.
+40.1
+5.1
+5.0
+4.8
+4.4
+5.0
+16.3
+38.1
+17.6
+15.4
+14.8
+23.7
+23.3
+26.4
+24.7
+23.1
+17.0
+Tax rate
+37.6
+36.9
+The German version is legally binding.
+INVESTOR RELATIONS
+Investor Relations
+Letterbox 1849
+38436 Wolfsburg, Germany
+E-mail investor.relations@volkswagen.de
+Internet www.volkswagenag.com/ir
+CONCEPT, DESIGN AND REALIZATION
+nexxar GmbH
+37.9
+ENGLISH TRANSLATION
+FINANCIAL REPORT
+Produced in-house with firesys
+PHOTOGRAPHY
+Volkswagen AG
+AUDI AG
+Jim Rakete
+Daniel Wollstein
+258.809.606.20
+Leinhäuser Language Services GmbH,
+Unterhaching
+9.7
+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.
+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.
+2 Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.
+3 Including the Chinese joint ventures. These companies are accounted for using the equity method.
+4 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.
+5 For details, see the section entitled "Return on investment (ROI) and value contribution in the reporting period" in the chapter entitled
+"Results of Operations, Financial Position and Net Assets".
+6 Ratio of property, plant and equipment to total assets.
+7 Ratio of inventories to total assets at the balance sheet date.
+8 Ratio of sales revenue to average monthly inventories.
+9 Earnings before tax as a percentage of average equity.
+Additional Information
+Selected terms at a glance
+Glossary
+Glossary
+393
+Vocational groups
+1 Adjusted.
+Equity ratio
+Return on equity before tax⁹
+Increase in total assets
+5.6
+0.7
+7.9
+11.2
+6.0
+17.3
+8.8
+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.
+10.8
+9.8
+14.5
+13.2
+12.8
+12.7
+13.7
+Financial Services Division
+9.9
+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.
+Net carbon neutrality
+Performance levels of hybrid vehicles. Plug-in hybrid
+electric vehicles (PHEVs) have a larger 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.
+Premium Platform Electric (PPE)
+A new vehicle platform for all-electric premium, sport
+and luxury class vehicles. The components and func-
+tions of this platform are especially tailored to meet
+the high demands of this segment. This platform
+enables high synergies to be achieved particularly
+between the Audi, Porsche and Bentley brands.
+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.
+Test procedure
+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 for all new
+vehicles since fall 2018. The aim of this new test cycle
+is to state CO2 emissions and fuel consumption in a
+more practice-oriented manner. A further important
+European regulation is the Real Driving Emissions
+(RDE) for passenger cars and light commercial vehi-
+cles, which also monitors emissions using portable
+emission measuring technology in real road traffic.
+Plug-in hybrid
+394
+Capitalization ratio
+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.
+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.
+Distribution ratio
+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
+information on how earnings are distributed.
+Gross margin
+Glossary
+Dividend yield
+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.
+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.
+Net carbon neutrality will be achieved if anthro-
+pogenic CO2 (carbon dioxide) emissions are offset
+globally through avoidance, reduction and
+compensation over a specified period of time.
+This encompasses all other relevant greenhouse
+gases as well. Avoidance and reduction of such
+gases is a priority for the Volkswagen Group.
+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.
+End-to-end electronics architecture
+A scalable platform developed by CARIAD for secure,
+rapid processing of data in the digitally connected
+vehicle. This platform improves communication
+between the vehicle and the cloud, thereby enhancing
+vehicle performance.
+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 first possible call date,
+followed by a variable rate depending on their terms
+and conditions.
+Zero-Emissions Vehicle (ZEV)
+Hybrid drive
+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 independently exchange information,
+trigger actions and control each other will be integrat-
+ed into production and logistics at a technical level.
+This offers tremendous versatility, efficient resource
+utilization, ergonomics and the integration of cus-
+tomers and business partners in operational processes
+throughout the entire value chain.
+Liquefied Natural Gas (LNG)
+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.
+Modular Electric Drive Toolkit (MEB)
+The modular system is for the manufacturing of
+electric vehicles. The MEB establishes parameters for
+axles, drive systems, high-voltage batteries, wheel-
+bases and weight ratios to ensure a vehicle optimally
+fulfills the requirements of e-mobility. The production
+of the first vehicles based on the MEB started into
+series production in 2020.
+Modular Transverse Toolkit (MQB)
+Drive combining two different types of engine and
+energy storage systems (usually an internal combus-
+tion engine and an electric motor).
+8.2
+422,193
+12.0
+497,114
+488,071
+458,156
+Cash flows from operating activities
+38,633
+24,901
+17,983
+7,272
+-1,185
+Cash flows from investing activities attributable to operating
+activities
+24,181
+18,372
+20,076
+19,386
+18,218
+Cash flows from financing activities
+-7,754
+528,609
+7,637
+Total equity and liabilities
+167,968
+128,783
+123,651
+117,342
+of which: noncontrolling interests
+1,705
+1,734
+Noncurrent liabilities
+218,062
+202,921
+1,870
+196,497
+225
+172,846
+109,077
+229
+152,726
+Current liabilities
+164,393
+165,410
+167,924
+160,389
+146,154
+-865
+17,625
+19.7
+19.0
+17.5
+18.2
+17.0
+17.5
+17.0
+7.7
+4.3
+6.7
+5.9
+6.0
+8.0
+5.2
+7.3
+6.6
+6.0
+19.5
+24,566
+17.5
+Equity ratio
+1 Adjusted
+392
+Financial Key Performance Indicators
+%
+Additional Information
+Financial Key Performance
+Indicators
+2021
+2020
+2019
+20171
+Volkswagen Group
+Gross margin
+Personnel expense ratio
+Operating return on sales
+Return on sales before tax
+Return on sales after tax
+18.9
+14.5
+422,193
+10.1
+10.4
+Return on investment (ROI)5
+26,094
+26,707
+29,706
+24,462
+31,609
+EBITDA (in € million)4
+5.7
+5.5
+6.5
+3.7
+6.4
+Operating return on sales
+6.7
+6.7
+7.6
+7.6
+Research and development costs as a percentage of sales revenue
++ 5.3
++2.7
++ 5.7
+- 14.3
+6.5
+11.2
+11.0
+12.1
+10.7
+Equity ratio
+Inventory turnover
+Ratio of current assets to total assets?
+Ratio of noncurrent assets to total assets
+Net liquidity as a percentage of sales revenue
+6.5
+6.6
+6.6
+6.1
+5.1
++ 13.3
+Capex as a percentage of sales revenue
+9.4
+9.4
+11.5
+Cash flows from investing activities attributable to operating
+activities as a percentage of sales revenue
+6.0
+9.2
+8.4
+13.6
+15.7
+revenue
+Cash flows from operating activities as a percentage of sales
+9.0
+Change in sales revenue year-on-year
+6.8
+5.2
+6.2
+4.0
+5.6
+5.0
+27.6
+25.9
++ 3.7
+25.3
+25.8
+Automotive Division²
+Change in unit sales year-on-year³
+-6.3
+- 16.4
++ 0.5
++1.1
+25.6
+Direct banking deposits
++2.3
+2021
+2020
+%
+Leasing agreements
+Customer financing
+Leasing
+Service/Insurance
+€ million
+thousands
+Number of contracts
+25,400
+Equity
+-8.4
+Total assets
+€ million
+235,620
+225,608
++4.4
+22,033
+€ million
+33,381
+29,406
++13.5
+Liabilities¹
+27,734
+21,907
+11,111
+6,151
+€ million
+-23.4
+18,448
+14,135
+Dealer financing
++2.8
+69,380
+71,305
+Customer financing
+46,409
+€ million
+Receivables from
++15.4
+49,653
+57,276
+€ million
+Lease assets
++5.0
+10,580
++1.7
+4,692
+45,379
+4,770
+-7.3
+6,635
++0.6
+192,407
+44
++2.6
+X
+€ million
+5,628
+2,577
+X
+14,681
+14,560
++0.8
+Employees at Dec. 31
+1 Excluding provisions and deferred tax liabilities.
+2 Earnings before tax as a percentage of average equity (continuing operations).
+3 Liabilities as a percentage of equity.
+Group Corporate Governance
+i ADDITIONAL INFORMATION
+CORPORATE GOVERNANCE
+Members of the Board of Management
+44
+Corporate Governance
+Group Corporate Governance Declaration
+54
+56
+59
+Members of the Supervisory Board and Composition of the Committees
+Remuneration Report
+.
+•
+•
+www.vwfsag.com
+187,545
+Declaration
+and principles of the German Corporate Governance Code.
+Equity ratio
+%
+14.2
+13.0
++8.7
+Return on equity before tax²
+Leverage³
+%
+17.9
+8.9
+X
+5.8
+The following chapter contains the content of the Group Corporate Governance Declaration
+required by sections 289f and 315d of the HGB and the recommendations
+6.4
+Operating result
+Earnings before tax
+€ million
+5,672
+Group Corporate Governance Declaration
+2,803
+Divisions
+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 December 9, 2021
+with the following wording:
+(valid as of the date of the declaration)
+DECLARATIONS OF CONFORMITY
+Corporate governance provides the regulatory framework for
+corporate management and supervision. This includes a
+company's organization and values, and the principles and
+guidelines for its business policy. The German Corporate
+Governance Code (the Code) contains principles, recommen-
+dations and suggestions for corporate management and
+supervision. Its principles, recommendations and sugges-
+tions were prepared by a dedicated government commission
+on the basis of the material provisions and nationally and
+internationally accepted standards of sound, responsible
+corporate governance. In the interests of best practice, the
+government commission regularly reviews the Code's
+relevance in light of current developments and updates it as
+necessary. The Board of Management and the Supervisory
+Board of Volkswagen AG base their work on the principles,
+recommendations and suggestions of the 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, employ-
+ees, business partners and investors in our work and enables
+us to meet the steadily increasing demand for information
+from national and international interest groups.
+THE GERMAN CORPORATE GOVERNANCE CODE A BLUEPRINT
+FOR SUCCESSFUL CORPORATE GOVERNANCE
+-9.6
+VOLKSWAGEN FINANCIAL SERVICES
+In 2021, Volkswagen Financial Services joined the Development and Climate Alliance Foundation, which
+was initiated in 2018 by the German Federal Ministry for Economic Cooperation and Development. Aimed
+primarily at the private sector, the foundation's objective is to create a non-governmental platform for climate
+protection efforts. Its supporters avoid and reduce greenhouse gas emissions or offset them through high-
+quality projects. Contributions are voluntary and go beyond existing legal obligations for reducing CO2.
+SALES REVENUE AND EARNINGS
+BOARD OF MANAGEMENT
+The Volkswagen AG Board of Management has sole responsi-
+bility for managing the Company in the Company's best
+interests, in accordance with the Articles of Association and
+the rules of procedure for the Board of Management issued by
+the Supervisory Board.
+Accordingly, responsibilities were divided among ten
+board-level management functions until December 31, 2021.
+In addition to the Chair of the Board of Management, a
+function which also includes the Volume brand group, the
+other Board functions are Purchasing, Technology, Finance,
+Human Resources and Truck & Bus, Integrity and Legal
+Affairs, Premium, Sport & Luxury, IT and China. As of
+December 31, 2021, the Chair of the Board of Management
+has also been responsible for China and the board member
+for Finance has also been responsible for IT. With effect from
+February 1, 2022, a board member is responsible for IT alone
+and the board-level function for China has once again been
+assigned to a specific member of the Board of Management
+as of August 1, 2022.
+In December 2021, the Supervisory Board decided to
+increase the number of members of the Board of Manage-
+ment and reorganize its structure and functions in the
+process. A new board-level management function for Volks-
+wagen Passenger Cars was created effective January 1, 2022. A
+new board-level management function was also created for
+Group Sales effective February 1, 2022.
+Information on the composition of the Board of Manage-
+ment can be found in the "Members of the Board of Man-
+agement" section.
+Sales revenue at Volkswagen Financial Services amounted to €41.7 billion in the reporting year. This was 7.8%
+more than in the previous year. The operating result more than doubled to €5.7 (2.8) billion. The increase was
+due primarily to the high demand for used vehicles and considerably lower risk costs for credit risks and
+residual value risks compared with the previous year. The cost-cutting programs also paid off.
+of-conformity.html
+i DECLARATION OF CONFORMITY OF TRATON SE
+https://ir.traton.com/websites/traton/English/5000/corporate-governance.html
+Working procedures of the Board of Management
+In accordance with Article 6 of the Articles of Association,
+Volkswagen AG's Board of Management consists of at least
+three people, with the precise number determined by the
+Supervisory Board. As of December 31, 2021, there were eight
+members of the Board of Management.
+The Board of Management generally meets weekly. Its
+rules of procedure require it to meet at least twice a month.
+Meetings of the Board of Management are convened by the
+Chair of the Board of Management. The Chair is required to
+convene a meeting if requested by any member of the Board
+of Management. The Chair of the Board of Management
+chairs the Board of Management meetings. In matters of
+general or fundamental importance, the decisions are taken
+by the entire Board of Management. The Board of Manage-
+ment takes decisions only after prior debate and/or using the
+written circulation procedure. Resolutions of the Board of
+Management are adopted by a majority vote. In the event of a
+tie, the Chair of the Board of Management casts the deciding
+vote.
+Each Board of Management member manages their area
+of responsibility independently, without prejudice to the
+collective responsibility of the Board of Management. All
+Board of Management members must inform each other of
+events within their remit.
+The Volkswagen Group companies are managed solely by
+their respective managements. The management of each
+individual company takes into account not only the interest
+of its own company but also the interests of the Group, the
+relevant brand group and the individual brands in accor-
+dance with the framework laid down by law.
+Board of Management committees
+Board of Management committees exist at Group level on the
+following areas: products, technologies, investments, digital
+transformation, integrity and compliance, risk management,
+human resources and management issues. Alongside the
+responsible members of the Board of Management, the
+relevant central departments and the relevant functions of
+the divisions are represented on the committees.
+Our listed indirect subsidiary TRATON SE also issued a
+declaration of conformity with the German Corporate Gover-
+nance Code. This can be accessed at the website shown below.
+The suggestions of the Code are complied with.
+The current declaration of conformity and previous declara-
+tions of conformity are also published on our website shown
+below.
+(3) Recommendation G.11 sentence 2 (Clawback provision)
+Contrary to sentence 2 of this recommendation, the former
+remuneration system made no provision for the company
+to retain or reclaim variable remuneration from the
+members of the Board of Management."
+Corporate Governance
+It is unclear from the wording of this recommendation
+whether the Chair of the Audit Committee is independent
+from the controlling shareholder within the meaning of
+this recommendation. Such independence could be consid-
+ered lacking in view of the fact that the Chair of the Audit
+Committee, in addition to other members of the Porsche
+and Piëch families, who are also related to each other, has
+an indirect interest in Porsche Automobil Holding SE.
+While it is our opinion that these relationships do not con-
+Corporate Governance
+Group Corporate Governance Declaration
+45
+stitute a conflict of interest nor do they interfere with his
+duties as the Chair of the Audit Committee, purely as a
+precautionary measure, the Board of Management and the
+Supervisory Board have hitherto declared a deviation. The
+intention is to re-examine this course of action in the near
+future, especially in light of the question whether, given the
+situation following the revision of the Code in 2020,
+Porsche Automobil Holding SE is the controlling share-
+holder of VOLKSWAGEN AG.
+> d) Recommendation C.13 (Disclosure regarding election
+proposals)
+With regard to this recommendation, according to which
+certain circumstances shall be disclosed when the Super-
+visory Board makes election proposals to the General
+Meeting, the guidelines in the Code are vague and the
+definitions unclear. Purely as a precautionary measure, we
+therefore declare a deviation from the Code in this respect.
+Notwithstanding this, the Supervisory Board will make
+every effort to satisfy the requirements of the recommen-
+dation.
+> e) Recommendation D.4 (Independence of the Chair of the
+Audit Committee)
+Cooperation with the Supervisory Board
+Regarding justification, we refer to the statements made
+above regarding Recommendation C.10 sentence 2. If the
+Chair of the Audit Committee is not independent from the
+controlling shareholder, according to the definition of
+Recommendation C.6, sentence 2, he/she is also not
+independent within the meaning of Recommendation D.4.
+The following recommendations of the Code, which have
+been deviated from in the past, are and will continue to be
+complied with in future as of the submission of this Decla-
+ration of Conformity:
+Chair. Since his transfer from the Board of Management to
+the Supervisory Board in October 2015, the composition of
+the Board of Management has also fundamentally
+changed. In light of this, the shareholder representatives
+passed a resolution that, in future, they shall regard the
+Chair of the Supervisory Board as independent from the
+company and the Board of Management within the
+meaning of Recommendation C.10 sentence 1.
+> b) The Supervisory Board had introduced a remuneration
+system in 2017, which took into account all recommen-
+dations of the Code in the applicable version at the time.
+These recommendations have changed significantly in the
+reformed Code. The remuneration system from 2017 did
+not comply with the amended recommendations in some
+aspects. As such, the Supervisory Board passed a resolution
+on 14 December 2020 on an enhanced remuneration sys-
+tem which complies with all of the new recommendations
+in the current Code. The enhanced remuneration system
+came into effect on 1 January 2021 and was approved by
+the Annual General Meeting on 22 July 2021. The following
+Code recommendations, from which deviations had been
+declared under the former remuneration system for Board
+of Management members, are complied with under the
+enhanced remuneration system:
+(1) Recommendations G.1 and G.2 (Remuneration system
+and target total remuneration)
+The remuneration ceilings within the previous remu-
+neration system were established without taking into
+account pension scheme expenses and fringe benefits and
+therefore do not represent maximum remuneration within
+the meaning of Recommendation G.1. The justification
+from the Commission on Recommendation G.1 establishes
+that the total remuneration is the sum of all remuneration
+components for the year in question, including the service
+cost within the meaning of IAS 19. This also applies to the
+maximum remuneration. Using the former remuneration
+system, it was not possible to deduce the relative propor-
+tion of the individual remuneration components of target
+total remuneration, within the meaning of the recom-
+mendation. Furthermore, contrary to Recommendation
+G.2, the Supervisory Board had not passed a resolution on
+specific target total remuneration for the individual mem-
+bers of the Board of Management within the meaning of
+Recommendation G.1.
+(2) Recommendation G.10 sentence 2 (Four-year commit-
+ment period)
+According to this recommendation, granted long-term
+variable remuneration components shall be accessible to
+members of the Board of Management only after a period
+of four years. The previous remuneration system provided
+for a Performance Share Plan with a three-year term and
+cash settlement at the end of this term, meaning that this
+remuneration component is available to the members of
+the Board of Management after three years.
+46
+Group Corporate Governance Declaration
+> a) Recommendation C.10 sentence 1 (Independence of the
+Chair of the Supervisory Board and Chairs of Committees)
+According to Recommendation C.10 sentence 1, which was
+introduced in March 2020, the Chair of the Supervisory
+Board and the Chair of the committee that addresses
+Management Board remuneration shall be deemed by the
+shareholder representatives to be independent from the
+company and the Management Board. According to
+Recommendation C.7 (2), there is indication of a lack of
+independence from the company and Management Board
+if a member of the Supervisory Board was a member of the
+Management Board in the two years prior to their
+appointment to the Supervisory Board. The Chair of the
+Supervisory Board, who is also the Chair of the committee
+that addresses Board of Management remuneration,
+transferred directly from the Board of Management to the
+Supervisory Board in October 2015. However, this transfer
+occurred more than six years ago. Following his initial
+appointment by the court, the Chair of the Supervisory
+Board was elected by the Annual General Meeting as a
+member of the Supervisory Board for the second time in
+July 2021 and was re-elected by the Supervisory Board as
+> c) Recommendation C.10 sentence 2 (Independence of the
+Chair of the Audit Committee)
+The Supervisory Board advises and monitors the Board of
+Management with regard to the management of the
+Company. Through the requirement for the Supervisory
+Board to provide consent, it is directly involved in decisions
+of fundamental importance to the Company. In addition, the
+Supervisory Board of Volkswagen AG and the Board of
+Management regularly discuss factors affecting the strategic
+orientation of the Volkswagen Group. The two bodies jointly
+assess, at regular intervals, the progress made in imple-
+menting the corporate strategy. The Board of Management
+reports to the Supervisory Board regularly, promptly and
+comprehensively in both written and oral form on all issues
+Group Corporate Governance Declaration
+Information on the composition of the Supervisory Board
+and the Supervisory Board committees and their chairs as
+well as on the terms of office of the individual Supervisory
+Board members can be found in the "Members of the Super-
+visory Board and committees" section. Further information
+on the work of the Supervisory Board and the Chair of the
+Supervisory Board's discussions with investors can be found
+in the "Report of the Supervisory Board".
+Overview
+The Supervisory Board of Volkswagen AG consists of 20
+members, half of whom are shareholder representatives. In
+accordance with Article 11(1) of the Articles of Association of
+Volkswagen AG, the State of Lower Saxony is entitled to
+appoint two of these shareholder representatives for as long
+as it directly or indirectly holds at least 15% of the Company's
+ordinary shares. The remaining shareholder representatives
+on the Supervisory Board are elected by the Annual General
+Meeting.
+The other half of the Supervisory Board consists of
+employee representatives elected by the employees in accor-
+dance with the Mitbestimmungsgesetz (MitbestG – German
+Codetermination Act). A total of seven of these employee
+representatives are Company employees elected by the work-
+force; the other three employee representatives are trade
+union representatives elected by the workforce.
+The Chair of the Supervisory Board is generally a share-
+holder representative, and the Deputy Chair is generally an
+employee representative. Both are elected by the other
+members of the Supervisory Board.
+The business of the Supervisory Board is managed by a
+dedicated office of the Supervisory Board Chair. The Chair of
+the Supervisory Board ensures the independence of the office
+of the Supervisory Board Chair and its staff and exercises the
+right to appoint and supervise staff in consultation with the
+responsible Board of Management members.
+The Supervisory Board appoints the Board of Manage-
+ment members and, on the basis of the Executive Com-
+mittee's recommendations, decides on a clear and compre-
+hensible system of remuneration for the Board of Manage-
+ment members. It presents this system to the Annual General
+Meeting for approval every time there is a material change,
+but at least once every four years.
+Each member of the Supervisory Board of Volkswagen AG
+is obliged to act in the Company's best interests. Supervisory
+Board members are not permitted to delegate their respon-
+sibilities to others.
+Every Supervisory Board member is obliged to disclose
+any conflicts of interest to the Chair of the Supervisory Board
+without delay. In its report to the Annual General Meeting,
+the Supervisory Board informs the Annual General Meeting
+of any conflicts of interest that have arisen and how these
+were dealt with. Material and not merely temporary conflicts
+of interest on the part of a Supervisory Board member should
+result in a termination of the member's mandate.
+Supervisory Board members should not hold board or
+advisory positions at major competitors of Volkswagen AG or
+major competitors of a company dependent on Volks-
+wagen AG and should not be in a personal relationship
+involving a major competitor.
+Members of the Supervisory Board receive appropriate
+support from the Company upon induction as well as with
+respect to education and training. Education and training mea-
+sures are outlined in the “Report of the Supervisory Board".
+Working procedures of the Supervisory Board
+As a rule, the Supervisory Board adopts its resolutions in
+meetings of all its members. It must hold at least two meet-
+ings in both the first and second halves of the calendar year.
+The precise number of meetings and the main topics dis-
+cussed are outlined in the “Report of the Supervisory Board".
+Due to the pandemic, many meetings were held virtually.
+The Chair of the Supervisory Board coordinates the work
+within the Supervisory Board. He represents the interests of
+the Supervisory Board externally and represents the Com-
+pany to the Board of Management on behalf of the whole
+Supervisory Board. Within reason, the Chair of the Super-
+visory Board discusses Supervisory Board-specific topics with
+investors and, in consultation with the Board of Manage-
+ment, may also discuss non-Supervisory Board-specific topics.
+More details can be found in the "Report of the Supervisory
+Board".
+To underline the importance of environmental sustain-
+ability, social responsibility and good corporate governance,
+the Supervisory Board has appointed an ESG (environmental,
+social and governance) officer. This role is currently per-
+formed by Mr. Hans Dieter Pötsch.
+The Supervisory Board should meet regularly also
+without the Board of Management. Each Supervisory Board
+meeting generally ends in a debate. Board of Management
+members are not present during this part of the meeting. The
+Chair of the Supervisory Board convenes and chairs the
+The Volkswagen AG Supervisory Board performs its role
+through its members working together. It advises and mon-
+itors the Board of Management with regard to the manage-
+ment of the Company and, through the requirement for the
+Supervisory Board to provide consent, is directly involved in
+decisions of fundamental importance to the Company.
+SUPERVISORY BOARD
+As a rule, members of the Board of Management should
+be appointed for a term of office ending no later than their
+65th birthday. Board of Management members may be
+appointed to serve beyond their 65th birthday until no later
+than their 68th birthday, provided this is agreed by a two-
+thirds majority of the Supervisory Board.
+culture and takes into account the diversity concept deter-
+mined by the Supervisory Board.
+47
+of relevance for the Company particularly with regard to
+strategy, planning, the development of the business, the risk
+situation, risk management and compliance.
+The Chair of the Board of Management is responsible for
+dealings with the Supervisory Board. The Chair is in regular
+contact with the Chair of the Supervisory Board and reports
+to him on all matters of particular significance without delay.
+The Supervisory Board has set out the Board of Manage-
+ment's obligations to provide information and reports in an
+information policy. The Board of Management must report
+conscientiously and faithfully to the Supervisory Board or its
+committees. With the exception of the immediate reports
+from the Chair of the Board of Management to the Chair of
+the Supervisory Board on matters of particular importance,
+the Board of Management is required to report to the Super-
+visory Board in writing as a rule.
+For transactions of fundamental importance, the Super-
+visory Board must provide its consent. The documents
+required for decision-making purposes must be provided to
+the Supervisory Board members in good time in advance of
+the meeting.
+Diversity concept and succession planning for the
+Board of Management
+The Supervisory Board has laid down the following diversity
+concept for the composition of the Board of Management
+(section 289f(2) no. 6 HGB):
+The Supervisory Board must also take diversity into
+account when considering who would be the best persons to
+appoint to the Board of Management as a body. The Super-
+visory Board understands diversity, as an assessment crite-
+rion, to mean in particular different yet complementary specia-
+list profiles and professional and general experience, also in
+the international domain, with both genders being appropri-
+ately represented. The Supervisory Board will also take the
+following aspects into account in this regard, in particular:
+> Members of the Board of Management should have many
+years of management experience.
+> Members of the Board of Management should, if possible,
+have experience based on different training and profes-
+sional backgrounds.
+Corporate Governance
+> The Board of Management as a whole should have tech-
+nical expertise, especially knowledge of and experience in
+the manufacture and sale of vehicles and engines of any
+kind as well as other technical products, and experience in
+the international domain.
+> Efforts are made to achieve a higher proportion of women
+than the statutory minimum.
+> The Board of Management should also have a sufficient
+mix of ages.
+The aim of the diversity concept is for the Board of Manage-
+ment members to embody a range of expertise and perspec-
+tives. This diversity promotes a good understanding of Volks-
+wagen AG's organizational and business affairs. Particularly,
+it enables the members of the Board of Management to be
+open to new ideas by avoiding groupthink. In this way, it
+contributes to the successful management of the Company.
+The diversity concept no longer contains any requirements
+for the Supervisory Board regarding a specific proportion of
+women on the Board of Management, as the Gesetz zur
+Ergänzung und Änderung der Regelungen für die gleichberech-
+tigte Teilhabe von Frauen an Führungspositionen in der Privat-
+wirtschaft und im öffentlichen Dienst (Führungspositionen-
+Gesetz II, FÜPOG II - the Second Act on Equal Participation of
+Women and Men in Leadership Positions in the Private and
+Public Sector) has eliminated the requirement to set a target
+for the proportion of women on the Board of Management.
+Volkswagen AG will instead be subject to a mandatory
+participation requirement in the future.
+In deciding who should be appointed to a specific Board
+of Management position, the Supervisory Board takes into
+account the interests of the Company and all the circum-
+stances of the specific case. In taking this decision and in
+long-term succession planning, the Supervisory Board
+orients itself on the diversity concept. The Supervisory Board
+is of the view that the diversity concept is reflected by the
+current composition of the Board of Management. The
+members of the Board of Management have many years of
+professional experience, particularly in an international
+context, and cover a broad spectrum of educational and
+professional backgrounds. The Board of Management col-
+lectively has excellent technical expertise and many years of
+collective experience in research and development, pro-
+duction, sales, finance and human resources management, as
+well as law and compliance. In addition, the Board of Man-
+agement has a sufficient mix of ages that corresponds to the
+requirements set by the Supervisory Board; the gender
+balance also meets the requirements set by the Supervisory
+Board up to now and the future legal requirements (see “Dis-
+closures required by the Führungspositionen-Gesetz").
+Long-term succession planning within the meaning of
+Recommendation B.2 of the Code is achieved through regular
+discussions between the Chair of the Board of Management
+and the Chair of the Supervisory Board as well as regular
+discussions in the Executive Committee. The contract terms
+for existing Board of Management members are discussed,
+along with potential extensions and potential successors. In
+particular, the discussions look at what knowledge,
+experience and professional and personal competencies
+should be represented on the Board of Management with
+regard to the corporate strategy and current challenges, and
+to what extent the current composition of the Board of
+Management already reflects this. Long-term succession
+planning is based on the corporate strategy and corporate
+48
+Group Corporate Governance Declaration
+Corporate Governance
+> The Board of Management as a whole should have many
+years of experience in research and development, produc-
+tion, sales, finance and human resources management, as
+well as law and compliance.
+The Chair of the Supervisory Board is also Chair of the
+Supervisory Boards of two listed companies of the VOLKS-
+WAGEN Group, namely VOLKSWAGEN AG and TRATON SE, as
+well as being on the Supervisory Board of Bertels-
+mann SE & Co. KGaA. He is also Chair of the Board of Man-
+agement of Porsche Automobil Holding SE. Porsche Auto-
+mobil Holding SE is not part of the same group as VOLKS-
+WAGEN AG and TRATON SE within the meaning of German
+stock corporation law. We are, however, confident that the
+Chair of the Supervisory Board of VOLKSWAGEN AG has
+sufficient time at his disposal to fulfil the duties related to
+his mandate.
+i DECLARATION OF CONFORMITY OF VOLKSWAGEN AG
+www.volkswagenag.com/en/Investor Relations/corporate-governance/declaration-
+As hitherto, the duration of first-time appointments to the
+Board of Management will be determined by the Super-
+visory Board in such a way as is appropriate to the partic-
+ular case and focused on the good of the company.
+BUSINESS DEVELOPMENT
+Volkswagen Financial Services comprises dealer and customer financing, leasing, direct banking and insurance
+activities, fleet management and mobility services in 47 countries. The key companies are Volkswagen Financial
+Services AG and its affiliated companies such as Volkswagen Leasing GmbH, as well as Volkswagen Bank GmbH,
+Porsche Financial Services and the financial services companies in the United States and Canada, the only
+exceptions being the financial services business of the Scania and Navistar brand and of Porsche Holding
+Salzburg.
+STRUCTURE OF VOLKSWAGEN FINANCIAL SERVICES
+Divisions
+services and mobility services.
+Volkswagen Financial Services continued its robust business performance
+in a difficult 2021. It expanded its attractive range of
+THE KEY TO MOBILITY
+VOLKSWAGEN FINANCIAL SERVICES
+Volkswagen Financial Services
+40
+40
+39
+3,574,621
+2,948,931
+Total
+151,245
+671,659
+Volkswagen Financial Services has offered its customers a car subscription (AutoAbo) since 2020 and further
+expanded this mobility service in the reporting year. Customers can book various classes of vehicles and
+conclude a contract for a minimum of three months. Thereafter, this contract can be terminated on a monthly
+basis. Subscribers pay only for the use of the vehicle and for fuel. All other relevant costs such as registration,
+servicing, insurance and taxes are covered by the monthly mobility rate. In the dynamic market for mobility
+products, the financial service provider is responding to the private customer's desire for a high degree of
+flexibility and comprehensive cost control with its AutoAbo car subscription service. The subscription service
+was expanded in the reporting year to include the ID.3. Volkswagen Financial Services is thus helping the Group
+to systematically implement its e-mobility strategy.
+In 2021, Volkswagen Financial Services entered into the leasing and financing of bicycles. Volkswagen
+Financial Services has gained important partners through various equity investments and a sales cooperation
+with Bike Mobility Services GmbH. This enables customers throughout Germany to select the bicycle of their
+choice at a bike shop, sign the contract there and take the cycle with them. As well as leasing, customers can
+also obtain a financing solution through the FINANCE A BIKE brand.
+Already established in Germany, the United Kingdom and Spain, the online used vehicle platform heycar
+was rolled out in France during fiscal year 2021. With the Renault Group and RCI Bank and Services, the Berlin-
+based heycar Group has another strategic partner and a strong investor at its side along with Volkswagen
+Financial Services, Volkswagen AG, Daimler Mobility AG and Allianz SE. This will allow heycar to gather further
+momentum in terms of expanding across Europe and growing its existing offering.
+€5.7 billion
+2021.
+As of the end of the reporting period, Volkswagen Bank GmbH managed 1.4 (1.4) million deposit accounts.
+Volkswagen Financial Services employed 14,681 people worldwide, including 7,385 in Germany, as of year-end
+The number of new financing, leasing, service and insurance contracts from Volkswagen Financial Services
+signed in fiscal year 2021 fell by 1.1% year-on-year to 7.8 million. With 22.0 (21.9) million contracts being closed
+as of December 31, 2021, the total number of contracts was higher than in the prior year. The number of
+contracts in the Customer Financing/Leasing area fell by 3.6% to 10.9 million. The Service/Insurance area
+accounted for 11.1 million contracts, 5.0% 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 at 35.8 (35.2)%.
+Volkswagen Financial Services
+42
+42
+ID.3 in AutoAbo
+Outside Germany, Volkswagen Financial Services issued a total of six ABS transactions in the United States,
+China, Japan, Australia and Brazil.
+2,751,717
+In fiscal year 2021, Volkswagen Leasing GmbH placed three ABS transactions secured by lease receivables
+with a volume of €2.75 billion. The issuances met the quality criteria of the STS Securitization Regulation for
+particularly high-value securitizations and were oversubscribed several times.
+Volkswagen Bank did not enter into any transactions with secured or unsecured bonds in the reporting
+> b) Recommendation C.5 (Mandate ceiling regarding Board
+of Management mandate)
+In 2021, Volkswagen Financial Services AG issued three bonds with different terms and a total volume of
+€2.5 billion. Volkswagen Leasing GmbH placed a total of six bonds with a total volume of €5.5 billion. Risk
+premiums in fiscal year 2021 were back at, or in some cases even below, pre-crisis levels.
+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.
+41
+Volkswagen Financial Services
+Divisions
+Operating result
+period.
+2,288,021
+606,509
+54,401
+Other bond transactions were conducted in currencies such as pounds sterling, Swedish kronor and
+Norwegian kroner. In addition to this, private placements were issued in various currencies.
+Volkswagen Passenger Cars
+3,849
+3,305
+Deliveries
+2020
+2021
+Volkswagen Group China
+€ million
+%
+2020
+2021
+Thousand units
+Divisions
+"The Board of Management and the Supervisory Board
+declare the following:
+The recommendations of the Government Commission of
+the German Corporate Governance Code in the version dated
+16 December 2019 (the Code) that was published by the
+German Ministry of Justice in the official section of the
+Federal Gazette (Bundesanzeiger) on 20 March 2020 were
+complied with in the period from the last Declaration of
+Conformity dated 13 November 2020 and will continue to be
+complied with, with the exception of the recommendations
+and reasons hereinafter and periods stated.
+> a) Recommendation B.3 (Duration of first-time appoint-
+ments to the Board of Management)
+Audi
+ŠKODA
+-14.1
+Vehicle sales¹
+EARNINGS
+ID. family
+2021
+Units
+LOCAL PRODUCTION
+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.
+2020
+The proportionate operating result of the joint ventures in
+the reporting year stood at €3.0 (3.6) billion. The negative
+impacts of pandemic-related lower unit sales and more
+intense market competition were offset by improvements in
+the mix and cost optimization.
+1 Produced locally.
+9,744
+3,602
+Our joint ventures produced a total of 2.9 (3.6) million vehi-
+cles in fiscal year 2021. The joint ventures produce a mixture
+of established Group models and those specially modified for
+Chinese customers (e.g. with extended wheelbases), as well as
+vehicles developed exclusively for the Chinese market (such
+as the Volkswagen Lamando, Teramont, ID.6 X, or ID.6 CROZZ).
+8,740
+Operating result (100%)
+Operating result (proportionate)
+-14.9
+-17.5
+3,575
+2,949
+Production
+3,577
+3,026
+3,042
+> Knowledge in the areas of governance, law or compliance,
+> Detailed knowledge in the areas of finance, accounting, or
+auditing,
+> Human resources expertise (particularly the search for and
+selection of members of the Board of Management, and the
+succession process) and knowledge of incentive and remu-
+neration systems for the Board of Management,
+> Knowledge in the areas of controlling/risk management
+and the internal control system,
+> Knowledge of the capital markets,
+The Supervisory Board regularly evaluates every two years
+how effectively the Board and its committees are performing
+their tasks. This initially involves distributing a questionnaire
+to all Supervisory Board members, in which they are able to
+give their view of the effectiveness of the work of the
+Supervisory Board and its committees and suggest possible
+improvements. Following analysis of the questionnaires, the
+findings and potential improvements are usually discussed at
+the next regular meeting of the full Board. The most recent
+self-evaluation took place from late 2021 to early 2022.
+> Knowledge in the field of research and development, par-
+ticularly of technologies with relevance for the Company,
+> Knowledge of or experience in the manufacture and sale of
+all types of vehicles and engines or other technical products,
+> Knowledge of the automotive industry, the business model
+and the market, as well as product expertise,
+51
+Group Corporate Governance Declaration
+> Detailed knowledge or experience in the areas of codeter-
+mination, employee matters and the working environment
+in the Company.
+Corporate Governance
+In addition, the Supervisory Board has decided on the
+following profile of skills and expertise for the full Board: the
+Supervisory Board as a whole must collectively have the
+knowledge, skills and professional expertise required to
+properly perform its supervisory function and assess and
+monitor the business conducted by the Company. For this,
+the members of the Supervisory Board must collectively be
+familiar with the sector in which the Company operates. The
+key skills and requirements of the Supervisory Board as a
+whole include, in particular:
+> Experience in corporate leadership positions or in the
+supervisory bodies of large companies,
+The Supervisory Board has also specified the following
+diversity concept for its composition:
+52
+> It has therefore set targets for its composition that also
+take into account the recommendations of the German
+Corporate Governance Code. The targets set by the Super-
+visory Board for its composition also describe the concept
+through which the Supervisory Board as a whole strives to
+achieve a diverse composition (diversity concept in accor-
+dance with section 289f(2) no. 6 of the HGB). Attention
+should also be generally paid to diversity when seeking
+qualified individuals to strengthen the specialist and
+managerial expertise of the Supervisory Board as a whole
+in line with these targets. In preparing proposals for
+appointments to the Supervisory Board, it should be con-
+sidered in each case how the work of the Supervisory Board
+will benefit from a diversity of expertise and perspectives
+among its members, from professional profiles, profes-
+sional and general experience that complement one
+another (including in the international domain) and from
+an appropriate gender balance. A wide range of experience
+and specialist knowledge should be represented on the
+Supervisory Board. In addition, the Supervisory Board
+should collectively have an extensive range of opinions and
+knowledge in order to develop a good understanding of the
+status quo and the longer-term opportunities and risks in
+connection with the Company's business activities.
+> In proposing candidates to the Annual General Meeting for
+the election of shareholder representatives to the Super-
+visory Board, the Supervisory Board should take its diver-
+sity concept into account in such a way that the correspon-
+ding election of these candidates by the Annual General
+Meeting would contribute to the implementation of this
+concept. However, the Annual General Meeting is not
+obliged to accept the candidates nominated.
+> The aim of the diversity concept is for the Supervisory
+Board members to embody a range of expertise and per-
+spectives. This diversity promotes a good understanding of
+Volkswagen AG's organizational and business affairs. It also
+enables the Supervisory Board members to challenge the
+Board of Management's decisions constructively and to be
+open to new ideas by avoiding groupthink. In this way, it
+contributes to the effective supervision of the manage-
+ment.
+> The Supervisory Board and Nomination Committee, in
+particular, are called upon to implement the profile of skills
+and expertise and the diversity concept within the context
+of their candidate proposals to the Annual General Meet-
+ing. The Supervisory Board also recommends to employee
+representatives and unions (which have the right to submit
+proposals in employee representative elections) and the
+State of Lower Saxony (which has a right to appoint Super-
+visory Board members) that the diversity concept, compo-
+sition targets and profile of skills and expertise should be
+taken into account. The same applies to individuals entitled
+to make proposals should a court-appointed replacement be
+necessary.
+The current composition of the Supervisory Board fulfills
+both the diversity concept and the profile of skills and
+expertise. The Supervisory Board collectively has outstanding
+knowledge of the manufacture and sale of vehicles and
+engines, of the automotive sector and of the technologies
+relevant for Volkswagen AG; the members of the Supervisory
+Board are therefore collectively familiar with the sector in
+which Volkswagen AG operates. Moreover, numerous Super-
+visory Board members have extensive experience in man-
+agerial and supervisory functions. All the relevant expertise
+in the further individual areas specified in the profile of skills
+and expertise is represented on the Supervisory Board.
+Furthermore, several Supervisory Board members, including
+Ms. Heiß, Ferdinand Oliver Porsche and Mr. Pötsch, have
+expertise in both accounting and auditing: Ms. Heiß worked
+as a CFO for a long time and previously for audit and tax
+consulting firms for several years; Ferdinand Oliver Porsche
+is a long-standing member and chair of audit committees
+and worked for an audit firm for several years; Mr. Pötsch is a
+long-standing member and chair of audit committees and
+worked for many years as CFO and previously as Head of
+52
+Group Corporate Governance Declaration
+Corporate Governance
+Controlling at BMW AG. Details on the expertise of the
+Supervisory Board members can be found in their
+individual curriculum vitae. The curriculum vitae of the
+members of the Supervisory Board are available online at
+www.volkswagenag.com/en/group/executive-bodies.html.
+In their proposal to the Annual General Meeting in fiscal
+year 2021 for the re-election of two Supervisory Board
+members, the Nomination Committee and Supervisory
+Board took into account the diversity concept, specific
+composition targets and profile of skills and expertise. The
+composition targets, diversity concept and profile of skills
+and expertise were also taken into account in the court
+appointment of three new Supervisory Board members by
+the employee representatives in 2021.
+Self-evaluation of the Supervisory Board
+Aside from their Supervisory Board appointments, Hans
+Michel Piëch, Ferdinand Oliver Porsche, Wolfgang Porsche
+and Hussain Ali Al Abdulla have no personal relationship
+with the Company or the Board of Management that could
+give rise to a material and not merely temporary conflict of
+interest. The Supervisory Board work of Hans Michel Piëch,
+Ferdinand Oliver Porsche, Wolfgang Porsche and Hussain Ali
+Al Abdulla in recent years has also not given rise to any
+conflicts of interest.
+> The Supervisory Board must be comprised such that its
+members collectively have the knowledge, skills, and pro-
+fessional experience needed to properly perform their
+duties.
+> Hans Michel Piëch, Ferdinand Oliver Porsche, Wolfgang
+Porsche and Hussain Ali Al Abdulla are not financially
+dependent on their remuneration as members of the
+Supervisory Board.
+the Board of Management other than remuneration and
+consent to ancillary activities by members of the Board of
+Management. The Executive Committee supports and advises
+the Chair of the Supervisory Board. It works with the Chair of
+the Board of Management to ensure long-term succession
+planning for the Board of Management.
+> Hussain Ali Al Abdulla is a representative of Qatar Holding
+LLC, which as one of the largest single shareholders of
+Volkswagen AG holds 16.4% of the share capital and 17.0 %
+of the voting rights. The management by the Board of
+Management of Volkswagen AG therefore also economically
+affects the assets of Qatar Holding LLC.
+-
+MAN Truck & Bus SE and TRATON SE
+Corporate Governance
+Group Corporate Governance Declaration
+49
+Supervisory Board meetings. If the Chair is unable to do so,
+the Deputy Chair performs these tasks. If the auditor is called
+to a meeting of the Supervisory Board or one of its com-
+mittees as an expert, members of the Board of Management
+do not attend such a meeting if the Supervisory Board or the
+committee does not deem their attendance necessary.
+The Supervisory Board is only quorate if at least ten
+members participate in passing the resolution. The Chair of
+the Supervisory Board or of the relevant committee decides
+the form of the meeting and the voting procedure for the
+Supervisory Board and its committees. Should the Chair so
+decide in individual cases, meetings may also be held using
+telecommunications technology, or members may partici-
+pate in meetings using this technology. The Chair may also
+decide that members can participate in the Supervisory
+Board's or its committees' decision making in writing, by
+telephone or in another, similar form. Supervisory Board
+resolutions require a majority of votes cast, unless legislative
+provisions or the Articles of Association stipulate otherwise.
+Decisions to establish or relocate production sites require a
+two-thirds majority of the Supervisory Board members. If a
+vote results in a tie on this item, the vote is repeated. If this
+vote is also tied, the Chair of the Supervisory Board casts two
+votes. Minutes must be taken of each meeting of the
+Supervisory Board and its committees. Minutes of a meeting
+must record the time and location of the meeting, the
+participants, the items on the agenda, the material content of
+the discussions and the resolutions adopted.
+In individual cases, the Supervisory Board may decide to
+call upon experts and other appropriate individuals to advise
+on individual matters.
+Supervisory Board committees
+In order to discharge the duties entrusted to it, the Super-
+visory Board has established four committees: the Executive
+Committee, the Nomination Committee, the Mediation
+Committee established in accordance with section 27(3) of
+the Mitbestimmungsgesetz (MitbestG - German Codetermi-
+nation Act) and the Audit Committee. The Executive Com-
+mittee is currently comprised of four shareholder representa-
+tives and four employee representatives. The shareholder
+representatives on the Executive Committee make up the
+Nomination Committee. The remaining two committees are
+each composed of two shareholder representatives and two
+employee representatives.
+Which tasks the Supervisory Board has generally trans-
+ferred to the respective committees is described below. This
+does not rule out that the Supervisory Board will not transfer
+other tasks to committees in individual cases, where legally
+admissible.
+At its meetings, the Executive Committee meticulously
+prepares the resolutions of the Supervisory Board, discusses
+the composition of the Board of Management and takes
+decisions on matters such as contractual issues concerning
+The Nomination Committee proposes suitable candidates
+for the Supervisory Board to recommend to the Annual
+General Meeting for election. Before presenting such pro-
+posals, it ensures that the candidates can commit the
+expected time to their role and identifies the personal and
+business relationships of the candidates to Volkswagen AG
+and its Group companies, to Volkswagen AG's corporate
+bodies and to shareholders who directly or indirectly hold
+more than 10% of the voting shares in Volkswagen AG. In its
+proposals to the Supervisory Board, the Nomination Commit-
+tee also takes into account the requirement for the Super-
+visory Board to adhere, in its proposals to the Annual General
+Meeting, to the specific targets it has set for the composition
+of the Supervisory Board and to the profile of skills and
+expertise it has decided on for the Board as a whole; the
+Nomination Committee also takes into account the diversity
+concept for the composition of the Supervisory Board.
+The Mediation Committee has the task of submitting
+proposals to the Supervisory Board for an appointment or
+revocation of appointment if there is no majority for the
+relevant measure on the Supervisory Board in the first vote.
+The majority involves at least two-thirds of all Supervisory
+Board members.
+Among other things, the Audit Committee discusses the
+auditing of financial accounting, including the annual and
+consolidated financial statements, as well as monitoring of
+the accounting process, and the audit of the financial state-
+ments. It also discusses compliance and the effectiveness of
+the risk management system, internal control system and
+internal audit system. In addition, the Audit Committee
+particularly concerns itself with the Volkswagen Group's
+quarterly financial reports and half-yearly financial report.
+A further committee formed by the Supervisory Board is
+the Special Diesel Engine Committee, which was in existence
+from October 2015 to December 2021. Comprised of three
+shareholder representatives and three employee
+representatives, the Special Diesel Engine Committee was
+responsible for supporting the investigations in connection
+with the manipulation of emissions figures for Volkswagen
+Group diesel engines and preparing Supervisory Board
+resolutions for necessary consequences at Supervisory Board
+level. To this end, the Special Diesel Engine Committee was
+provided with regular information by the Board of
+Management. The Chair of the Special Diesel Engine Com-
+mittee reported regularly on the Committee's work to the
+Supervisory Board. The tasks of the Special Diesel Engine
+Committee were essentially completed by the end of
+December 2021: the Supervisory Board has completed its
+50
+Group Corporate Governance Declaration
+Corporate Governance
+investigations into the diesel issue as far as the civil liability
+of the members of the boards are concerned. In light of this
+situation, the Supervisory Board dissolved the Special Diesel
+Engine Committee with effect from the end of Decem-
+ber 31, 2021. Any measures connected with the diesel issue to
+be addressed in the future will be discussed directly by the
+full Supervisory Board and prepared by the Executive Com-
+mittee.
+Objectives for the composition of the Supervisory Board, profile of
+skills and expertise and diversity concept
+In view of the Company's specific situation, its purpose, its
+size and the extent of its international activities, the Super-
+visory Board of Volkswagen AG strives to achieve a compo-
+sition that takes the Company's ownership structure and the
+following aspects into account:
+> At least three members of the Supervisory Board should be
+persons who embody the criterion of internationality to a
+particularly high degree.
+> In addition, at least four of the shareholder representatives
+should be persons who, in line with the criteria of
+Recommendations C.7 to C.9 of the Code, are independent
+within the meaning of Recommendation C.6 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.
+persons
+Proposals for election should not normally include ]
+who have reached the age of 75 on the date of the election.
+The above criteria have been met. Numerous members of the
+Supervisory Board embody the criterion of internationality
+to a particularly high degree; various nationalities are repre-
+sented on the Supervisory Board and numerous members
+have international professional experience. Several members
+of the Supervisory Board contribute to the Board's diversity
+to a particularly high degree, especially Dr. Hessa Sultan
+Al Jaber, Ms. Marianne Heiß, Ms. Bertina Murkovic and
+Dr. Hussain Ali Al Abdulla. The Supervisory Board comprises
+members of various generations. Independent Supervisory
+Board members within the meaning of Recommendation C.6
+of the Code currently comprise at least the following:
+Dr. Hessa Sultan Al Jaber, Dr. Hussain Ali Al Abdulla,
+Mr. Bernd Althusmann and Mr. Stephan Weil.
+Supervisory Board members Dr. Hans Michel Piëch,
+Dr. Ferdinand Oliver Porsche and Dr. Wolfgang Porsche have
+been members of the Supervisory Board for more than 12
+years and therefore fulfill one of the indicators set out in C.7
+of the Code regarding a lack of independence from the
+Company and its Board of Management. The same will apply
+to Supervisory Board member Hussain Ali Al Abdulla from
+April 23, 2022. However, considering all the circumstances of
+the case in hand, the shareholder representatives are of the
+opinion that the aforementioned Supervisory Board mem-
+bers are nevertheless independent from the Company and its
+Board of Management. This opinion is based in particular on
+the following reasons:
+> Hans Michel Piëch, Ferdinand Oliver Porsche and Wolfgang
+Porsche, together with other family shareholders, are
+indirectly controlling shareholders of Porsche Automobil
+Holding SE, which as the largest single shareholder of
+Volkswagen AG holds 31.4% of the share capital and 53.3%
+of the voting rights. The management by the Board of
+Management of Volkswagen AG therefore economically
+affects the personal assets of Hans Michel Piëch, Ferdinand
+Oliver Porsche and Wolfgang Porsche.
+> The composition of the Board of Management has changed
+fundamentally several times over the past 12 years during
+the tenure of Hans Michel Piëch, Ferdinand Oliver Porsche,
+Wolfgang Porsche and Hussain Ali Al Abdulla. The incum-
+bent Board of Management members have been in office
+for a maximum of approximately seven years. There are
+therefore no indications that Hans Michel Piëch, Ferdinand
+Oliver Porsche, Wolfgang Porsche and Hussain Ali Al
+Abdulla would stop behaving in an impartial manner
+towards incumbent members of the Board of Management
+as a result of a long period of collaboration. There is also no
+other evidence of “tunnel vision” on the part of Hans
+Michel Piëch, Ferdinand Oliver Porsche, Wolfgang Porsche
+and Hussain Ali Al Abdulla.
+DISCLOSURES REQUIRED BY THE FÜHRUNGSPOSITIONEN-GESETZ
+The statutory quota of at least 30% women and at least 30%
+men has applied to new appointments to the Supervisory
+Board of Volkswagen AG since January 1, 2016 as required by
+the Gesetz für die gleichberechtigte Teilhabe von Frauen und
+Männern an Führungspositionen in der Privatwirtschaft und
+im öffentlichen Dienst (Führungspositionen-Gesetz, FÜPOG
+German Act on the Equal Participation of Women and Men in
+Leadership Positions in the Private and Public Sectors).
+Shareholder and employee representatives have resolved that
+each side will meet this quota separately. The shareholder
+representatives have met the quota of at least 30% women
+and at least 30% men since the 56th Annual General Meeting
+on June 22, 2016. The employee representatives have met the
+quota since the end of the 57th Annual General Meeting on
+May 10, 2017. Both the shareholder and the employee repre-
+sentatives fulfilled the quota on December 31, 2021.
+Shanghai³
+In line with the Führungspositionen-Gesetz II Volkswagen AG
+will in future be subject to a mandatory participation
+requirement under which the Board of Management must
+have at least one woman and at least one man. The parti-
+cipation requirement will apply to the appointment of one or
+more members of the Board of Management from August 1,
+2022. Volkswagen AG already complied with this partici-
+pation requirement in fiscal year 2021. The requirement
+to set a target for the proportion of women in the Board
+of Management already ended as of August 12, 2021.
+Ms. Werner's appointment ended on January 31, 2022. The
+Supervisory Board appointed two women as new members
+of the Board of Management effective February 1, 2022:
+Ms. Stars and Ms. Wortmann.
+PETER MOSCH (*1972)
+April 30, 2015¹, elected until 2026
+Nationality: Austrian
+DR. LOUISE KIESLING (*1957)
+Entrepreneur
+Nationality: German
+May 10, 2017¹, appointed until 2022
+Deputy Chair of the Works Council of Volkswagen AG,
+Kassel plant
+ULRIKE JAKOB (*1960)
+○ Porsche Automobil Holding SE, Stuttgart², 4
+○ AUDI AG, Ingolstadt³
+Chair of the General Works Council of AUDI AG
+January 18, 2006¹, appointed until 2022
+Nationality: German
+Appointments:
+Chief Executive Officer of BBDO Group
+Germany GmbH, Düsseldorf
+MARIANNE HEIẞ (*1972)
+Group Corporate Governance Declaration
+Corporate Governance
+2 Appointment outside the Group.
+3 Appointment within the Group.
+4 Listed company.
+1 Beginning or period of membership of the
+Supervisory Board.
+O Comparable appointments in Germany and abroad.
+○ Membership of statutory supervisory boards in
+Germany.
+O Volkswagen Pension Trust e.V., Wolfsburg³
+February 14, 2018¹, elected until 2023
+Nationality: Austrian
+Appointments:
+○ AUDI AG, Ingolstadt (Deputy Chair)³
+○ Audi Pensionskasse - Altersversorgung der
+AUTO UNION GmbH, VVaG, Ingolstadt³
+DR. JUR. HANS MICHEL PIËCH (*1942)
+Lawyer
+O Volkswagen Immobilien GmbH, Wolfsburg
+(until April 30, 2021)³
+O VfL Wolfsburg-Fußball GmbH, Wolfsburg³
+Volkswagen Group Services GmbH³
+O SEAT, S.A., Martorell (until April 30, 2021)³
+O ŠKODA Auto a.s., Mladá Boleslav
+(until April 30, 2021)³
+O Porsche Holding Gesellschaft m.b.H., Salzburg
+(until April 30, 2021)³
+Autostadt GmbH, Wolfsburg³
+O Allianz für die Region GmbH, Braunschweig
+(until April 30, 2021)²
+○ Wolfsburg AG, Wolfsburg (until April 30, 2021)³
+O TRATON SE, Munich (until April 30, 2021)3,4
+Appointments (as of April 30, 2021):
+January 1, 2005 to April 30, 2021¹
+Nationality: German
+of Volkswagen AG
+Chair of the General and Group Works Councils
+BERND OSTERLOH (*1956)
+O MOIA GmbH, Berlin³
+Appointments:
+May 10, 2017¹, appointed until 2022
+Nationality: German
+Chair of the Works Council of Volkswagen
+Commercial Vehicles
+BERTINA MURKOVIC (*1957)
+O Audi Stiftung für Umwelt GmbH, Ingolstadt³
+O CARIAD SE, Wolfsburg (Deputy Chair)³
+Appointments:
+January 1, 2013¹, appointed until 2022
+Nationality: German
+DR. JUR. HANS-PETER FISCHER (*1959)
+Chair of the Board of Management of Volkswagen
+Management Association e.V.
+Ⓒ VfL Wolfsburg-Fußball GmbH, Wolfsburg³
+Volkswagen Group Services GmbH³
+O Deutsche Messe AG, Hanover (Deputy Chair)²
+Appointments:
+Minister of Economic Affairs, Labor, Transport and
+Digitalization for the Federal State of Lower Saxony
+December 14, 2017¹, delegated until 2022
+Nationality: German
+DR. BERND ALTHUSMANN (*1966)
+O Qatar Satellite Company (Es'hailSat), Doha (Chair)²
+Trio Investment, Doha (Chair)²
+O MEEZA, Doha²
+O Malomatia, Doha (Chair)²
+Appointments:
+Nationality: Qatari
+June 22, 2016¹, elected until 2024
+Former Minister of Information and Communications
+Technology, Qatar
+DR. HESSA SULTAN AL JABER (*1959)
+O Qatar Supreme Council for Economic Affairs
+and Investment, Doha
+(Board member)²
+O Gulf Investment Corporation, Safat/Kuwait
+(Board member)²
+Appointments:
+April 22, 2010¹, elected until 2025
+Nationality: Qatari
+DR. HUSSAIN ALI AL ABDULLA (*1957)
+Minister of State
+○ Robert Bosch GmbH, Stuttgart²
+Appointments:
+November 20, 2015¹, appointed until 2022
+Nationality: German
+Deputy Chair (since November 20, 2015),
+First Chair of IG Metall
+O Container Terminal Wilhelmshaven JadeWeserPort-
+Marketing GmbH & Co. KG, Wilhelmshaven (Chair)²
+August 7, 2009¹, elected until 2024
+Nationality: Austrian
+Appointments:
+O JadeWeserPort Realisierungs GmbH & Co. KG,
+Wilhelmshaven (Chair)²
+Niedersachsen Ports GmbH & Co. KG, Oldenburg
+(Chair)²
+O ŠKODA Auto a.s., Mladá Boleslav³
+O Allianz für die Region GmbH, Braunschweig²
+Porsche Holding Gesellschaft m.b.H., Salzburg³
+O SEAT, S.A., Martorell³
+○ Wolfsburg AG, Wolfsburg³
+○ Volkswagen Financial Services AG, Braunschweig
+(Deputy Chair)³
+○ TRATON SE, Munich³,4
+Appointments:
+Nationality: Italian, German
+May 11, 2021¹, appointed until 2022
+of Volkswagen AG
+Chair of the General and Group Works Councils
+DANIELA CAVALLO (*1975)
+Nationality: Spanish
+April 1, 20211, appointed until 2022
+Chair of the General Works Council of SEAT
+MATÍAS CARNERO SOJO (*1968)
+O Mahle GmbH, Stuttgart²
+Appointments (as of March 31, 2021):
+June 20, 2020 to March 31, 2021¹
+Nationality: German
+Automotive and Supplier Industry Coordinator
+at IG Metall
+Head of Vehicle Construction and
+KAI BLIESENER (*1971)
+● JadeWeserPort Realisierungs- Beteiligungs-GmbH,
+Wilhelmshaven (Chair)²
+JÖRG HOFMANN (*1955)
+○ AUDI AG, Ingolstadt³
+○ Porsche Automobil Holding SE, Stuttgart
+(Deputy Chair)2,4
+Hans Dieter Pötsch (Chair)
+Jörg Hofmann (Deputy Chair)
+Daniela Cavallo
+Peter Mosch
+Bertina Murkovic
+Dr. Hans Michel Piëch
+Dr. Wolfgang Porsche
+Stephan Weil
+Members of the Mediation Committee established
+Members of the Executive Committee
+in accordance with section 27(3) of the
+Codetermination Act)
+Hans Dieter Pötsch (Chair)
+Jörg Hofmann (Deputy Chair)
+Daniela Cavallo
+Stephan Weil
+Members of the Audit Committee
+Dr. Ferdinand Oliver Porsche (Chair)
+Peter Mosch (Deputy Chair)
+Marianne Heiß
+Conny Schönhardt
+Members of the Nomination Committee
+Mitbestimmungsgesetz (German
+AS OF DECEMBER 31, 2021
+COMMITTEES OF THE SUPERVISORY BOARD
+○ Dr. Ing. h.c. F. Porsche AG, Stuttgart³
+(until August 31, 2021)
+May 10, 2017 to August 31, 2021¹
+Nationality: German
+Appointments (as of August 31, 2021):
+○ MAN SE, Munich (until August 31, 2021)³
+O MAN Truck & Bus SE, Munich
+(until August 31, 2021)³
+O MAN Truck & Bus Deutschland GmbH, Munich
+(until August 31, 2021)³
+○ Rheinmetall MAN Military Vehicles GmbH, Munich
+(until August 31, 2021)³
+○ TRATON SE, Munich (Deputy Chair)
+(until August 31, 2021) 3,4
+STEPHAN WEIL (*1958)
+Minister-President of the Federal State of
+Lower Saxony
+February 19, 2013¹, delegated until 2022
+Nationality: German
+WERNER WERESCH (*1961)
+Member of the Executive Committee of the Works
+Council of Porsche Automobil Holding SE and
+Chair of the General and Group Works Councils
+of Dr. Ing. h.c. F. Porsche AG
+February 21, 2019¹, appointed until 2022
+Nationality: German
+Appointments:
+Hans Dieter Pötsch (Chair)
+Dr. Hans Michel Piëch
+Dr. Wolfgang Porsche
+Stephan Weil
+Special Diesel Engine Committee
+(until December 31, 2021)
+JENS ROTHE (*1970)
+O Porsche Holding Gesellschaft m.b.H., Salzburg³
+O Schmittenhöhebahn AG, Zell am See²
+Porsche (China) Motors Limited, Shanghai³
+Porsche Hong Kong Limited, Hong Kong³
+O Porsche Greater China, consisting of:
+O Porsche Cars Great Britain Ltd., Reading³
+O Porsche Cars North America Inc., Atlanta³
+○ Porsche Automobil Holding SE, Stuttgart (Chair)2,4
+Familie Porsche AG Beteiligungsgesellschaft,
+Salzburg (Chair)²
+○ Dr. Ing. h.c. F. Porsche AG, Stuttgart (Chair)³
+○ AUDI AG, Ingolstadt³
+Appointments:
+DR. RER. COMM. WOLFGANG PORSCHE (*1943)
+Chair of the Supervisory Board of
+Porsche Automobil Holding SE;
+Chair of the Supervisory Board of
+Dr. Ing. h.c. F. Porsche AG
+April 24, 2008¹, elected until 2023
+Nationality: Austrian
+● Porsche Lifestyle GmbH & Co. KG, Ludwigsburg³
+Porsche Holding Gesellschaft m.b.H., Salzburg³
+○ Dr. Ing. h.c. F. Porsche AG, Stuttgart³
+○ Porsche Automobil Holding SE, Stuttgart²,4
+○ AUDI AG, Ingolstadt³
+Appointments:
+DR. JUR. FERDINAND OLIVER PORSCHE (*1961)
+Member of the Board of Management of Familie
+Porsche AG Beteiligungsgesellschaft
+August 7, 2009¹, elected until 2024
+Nationality: Austrian
+O Volksoper Wien GmbH, Vienna²
+O Schmittenhöhebahn AG, Zell am See²
+O Porsche Holding Gesellschaft m.b.H., Salzburg³
+O Porsche Greater China, consisting of:
+Porsche (China) Motors Limited, Shanghai³
+Porsche Hong Kong Limited, Hong Kong³
+O Porsche Cars Great Britain Ltd., Reading³
+O Porsche Cars North America Inc., Atlanta³
+Chair of the General Works Council
+○ Dr. Ing. h.c. F. Porsche AG, Stuttgart³
+of Volkswagen Sachsen GmbH
+October 22, 2021¹, appointed until 2022
+Appointments:
+O Membership of statutory supervisory boards in
+Germany.
+Dr. Wolfgang Porsche (Chair)
+Dr. Bernd Althusmann
+Daniela Cavallo
+Peter Mosch
+Bertina Murkovic
+Dr. Ferdinand Oliver Porsche
+Corporate Governance
+○ Membership of statutory supervisory boards in
+Germany.
+O Comparable appointments in Germany and abroad.
+1 Beginning or period of membership of the
+Supervisory Board.
+2 Appointment outside the Group.
+3 Appointment within the Group.
+4 Listed company.
+○ Volkswagen Bank GmbH, Braunschweig³
+O CARIAD SE, Wolfsburg³
+Appointments:
+June 21, 2019¹, appointed until 2022
+Nationality: German
+Union Secretary to the board of IG Metall
+CONNY SCHÖNHARDT (*1978)
+Group Corporate Governance Declaration
+58
+57
+2 Appointment outside the Group.
+3 Appointment within the Group.
+4 Listed company.
+1 Beginning or period of membership of the
+Supervisory Board.
+O Comparable appointments in Germany and abroad.
+○ Volkswagen Sachsen GmbH, Zwickau
+(Deputy Chair)³
+In accordance with the proportion of women on the
+Board of Management as defined by the Führungspositionen-
+Gesetz, the Supervisory Board had set a target of 11.1% for the
+period after December 31, 2016. The deadline set at the time
+for achievement of this target expired on December 31, 2021.
+The proportion of female members on the Board of Man-
+agement at Volkswagen AG as of December 31, 2021 was
+12.5%, thus meeting the target quota.
+O VfL Wolfsburg-Fußball GmbH, Wolfsburg
+(Deputy Chair)³
+O Porsche Holding Gesellschaft m.b.H., Salzburg
+(Chair)³
+Volkswagen Passenger Cars (since January 1, 2022),
+Chair of the Board of Management of the
+Volkswagen Passenger Cars brand (since July 1, 2020)
+January 1, 2022¹, appointed until 2026
+Nationality: German
+RALF BRANDSTÄTTER (*1968)
+O SEAT, S.A., Martorell³
+O Porsche Greater China, consisting of:
+(China) Motors Limited, Shanghai 3
+Porsche Hong Kong Limited, Hong Kong³
+O Porsche Enterprises Inc., Atlanta³
+O Porsche Digital GmbH, Ludwigsburg³
+● Porsche Consulting GmbH, Bietigheim-Bissingen³
+Porsche Deutschland GmbH, Bietigheim-Bissingen³
+O Porsche Cars North America Inc., Atlanta³
+O Porsche Cars Great Britain Ltd., Reading³
+Appointments (as of January 1, 2022):
+Bugatti-Rimac d.o.o., Sveta Nedelja³
+April 13, 2018¹, appointed until 2023
+Nationality: German
+Appointments:
+Dr. Ing. h.c. F. Porsche AG
+OLIVER BLUME (*1968)
+Sport & Luxury brand group,
+Chair of the Executive Board of
+O Volkswagen Group of America, Inc., Herndon
+O Volkswagen (China) Investment Co., Ltd., Beijing��
+O Shanghai Volkswagen Powertrain Co., Ltd.,
+○ Volkswagen Financial Services AG, Braunschweig
+(Chair)³
+O CARIAD SE, Wolfsburg³
+○ Dr. Ing. h.c. F. Porsche AG, Stuttgart³
+O CARIAD SE, Wolfsburg³
+O CARIAD SE, Wolfsburg³
+O ŠKODA Auto a.s., Mladá Boleslav³
+O Volkswagen (China) Investment Co., Ltd., Beijing³
+O Comparable appointments in Germany and abroad.
+○ Membership of statutory supervisory boards in
+Germany.
+(Chair)³
+● FAW-Volkswagen Automotive Co., Ltd, Changchun³
+● SAIC Volkswagen Automotive Co., Ltd., Shanghai³
+O Volkswagen (China) Investment Co., Ltd., Beijing³
+Bentley Motors Ltd., Crewe, UK (Chair)³
+Ducati Motor Holding S.p.A., Bologna (Chair)³
+O Automobili Lamborghini S.p.A.,
+Sant'Agata Bolognese (Chair)³
+O Audi (China) Enterprise Management Co., Ltd.,
+Beijing (Chair)³
+○ FC Bayern München AG, Munich (Deputy Chair)²
+○ CARIAD SE, Wolfsburg (Chair)³
+Appointments:
+Nationality: German
+Chair of the Board of Management of AUDI AG
+April 1, 2020¹, appointed until 2025
+Premium brand group,
+MARKUS DUESMANN (*1969)
+O Grizzlys Wolfsburg GmbH, Wolfsburg³
+○ PTV Planung Transport Verkehr AG, Karlsruhe²
+O TRATON SE, Munich³,4
+Appointments (as of February 1, 2022):
+Nationality: German
+February 1, 2022¹, appointed until 2025
+Integrity and Legal Affairs (since February 1, 2022)
+DR. JUR. MANFRED DÖSS (*1958)
+Appointments:
+April 1, 2021¹, appointed until 2024
+Nationality: German
+IT until February 1, 2022),
+Finance and IT (since April 1, 2021,
+54
+53
+The Code of Collaboration, along with our integrity and
+compliance program Together4Integrity (T41), is a central
+pillar of the new Group strategy NEW AUTO. This Code
+describes how collaboration is to take place within the Group
+and between individuals in their day-to-day work. Its core
+values are encapsulated in the terms “genuine", "straight-
+forward", "open-minded", "as equals" and "united". T4I brings
+together all activities relating to integrity, culture, com-
+pliance, risk management and human resources, creating a
+common path toward a new corporate culture.
+Code of Collaboration and Together4Integrity
+Voluntary commitments and principles that apply across
+the Group are the basis and backbone of our sustainability
+management. These documents are publicly accessible on the
+Volkswagen Group's website in the section entitled "Sustain-
+ability."
+We coordinate our sustainability activities across the
+entire Group and have put in place a forward-looking system
+of risk management and a clear framework for dealing with
+environmental issues in a future-oriented manner, for
+employee responsibility and for social commitment across
+our brands and in the regions in which we operate.
+The Volkswagen Group has committed itself to sustainable,
+transparent and responsible corporate governance.
+Voluntary commitments and principles
+> Risk management and internal control system. A com-
+prehensive risk management and internal control system
+(RMS/ICS) helps the Volkswagen Group deal with risks in a
+responsible manner. The organizational design of the
+Volkswagen Group's RMS/ICS is based on the interna-
+tionally recognized COSO framework for enterprise risk
+management (COSO: Committee of Sponsoring Organi-
+zations of the Treadway Commission) and can be accessed
+on the COSO website. Uniform Group principles are used as
+the basis for managing risks in a transparent and appro-
+priate manner.
+> Business and human rights. Volkswagen fully recognizes its
+corporate responsibility for human rights. We essentially
+orient ourselves on the UN (United Nations) Guiding
+Principles on Business and Human Rights that are available
+on the website of the UN (United Nations Global Compact),
+the content of which particularly relates to the Universal
+Declaration of Human Rights and the core conventions of
+the ILO (International Labor Organization) that can be
+accessed on the website of the ILO.
+It focuses on investigating serious infringements that
+could cause major damage to the Company's reputation or
+financial interests or that involve major breaches of the
+Volkswagen Group's ethical principles.
+Group Corporate Governance Declaration
+Corporate Governance
+> Whistleblower system. The Volkswagen whistleblower
+system is the central point of contact for reporting poten-
+tial cases of serious rule-breaking in the Volkswagen Group.
+> Compliance. Adherence to statutory provisions, internal
+company policies, ethical principles and our own values in
+order to protect the Company and its brands.
+To ensure the Volkswagen Group's lasting success, we use
+forward-looking risk management and a uniform Group-wide
+framework based on the compliance management system.
+This includes:
+Compliance and risk management
+CORPORATE PRACTICES APPLIED IN ADDITION TO STATUTORY
+REQUIREMENTS
+Extensive explanations of the remuneration system and
+the individual remuneration of the members of the Board
+of Management and Supervisory Board can be found in the
+Remuneration Report for fiscal year 2021, which forms
+part of the 2021 annual report, and on the website
+www.volkswagenag.com/en/InvestorRelations/corporate-gover-
+nance/Remuneration.html. Further information on remuner-
+ation can be found in the notes to Volkswagen's 2021
+consolidated financial statements and in the notes to the
+2021 annual financial statements of Volkswagen AG.
+REMUNERATION REPORT
+For the proportion of women in management in
+accordance with the Führungspositionen-Gesetz, Volkswagen
+AG had set itself the target of 13.0% women in the first level
+of management and 16.9% women in the second level of
+management for the period up to the end of 2021. As of
+December 31, 2021, the proportion of women in the active
+workforce at the first level of management was 13.5 (10.9)%
+and at the second level of management it was 18.3 (16.7)%.
+For the new period up to the end of 2025, Volkswagen AG has
+set itself the target of 16.5% women in the first level of
+management and 23.4% women in the second level of
+management, each as a proportion of the active workforce.
+Group Corporate Governance Declaration
+1 Beginning or period of membership of the Board of
+Management.
+Corporate Governance
+MANAGEMENT
+DR. ARNO ANTLITZ (*1970)
+O ŠKODA Auto a.s., Mladá Boleslav (Chair)³
+Appointments:
+January 1, 2021¹, appointed until 2023
+Nationality: German
+Purchasing
+MURAT AKSEL (*1972)
+O Volkswagen (China) Investment Co., Ltd., Beijing
+(Chair)³
+O SAIC Volkswagen Automotive Co., Ltd., Shanghai
+(Deputy Chair)³
+O Porsche Retail GmbH, Salzburg³
+● Porsche Holding Gesellschaft m.b.H, Salzburg
+(Deputy Chair)³
+O Porsche Austria GmbH, Salzburg (Deputy Chair)³
+O FAW-Volkswagen Automotive Co., Ltd, Changchun³
+O AUDI AG, Ingolstadt (Chair)³
+July 1, 2015¹, appointed until 2025
+Nationality: Austrian
+Appointments:
+China
+Volume brand group,
+Chair,
+DR.-ING. HERBERT DIESS (*1958)
+December 31, 2021)
+leaving date from the Board of Management of
+Volkswagen AG or the start date after
+(Appointments: as of December 31, 2021 or the
+MEMBERS OF THE BOARD OF
+O Porsche Retail GmbH, Salzburg (Chair)³
+2 Appointment outside the Group.
+Corporate Governance
+O Membership of statutory supervisory boards in
+Germany.
+O Volkswagen Immobilien GmbH, Wolfsburg
+(Chair, until March 31, 2021)³
+• Volkswagen Group Services GmbH, Wolfsburg
+(until March 31, 2021)³
+(until March 31, 2021)³
+O Volkswagen (China) Investment Co., Ltd., Beijing
+Ⓒ VfL Wolfsburg-Fußball GmbH, Wolfsburg (Chair)³
+O Northvolt AB, Stockholm (until June 30, 2021)²
+(until March 31, 2021)³
+O ŠKODA Auto a.s., Mladá Boleslav
+O Comparable appointments in Germany and abroad.
+○ Volkswagen Financial Services AG, Braunschweig
+(Chair, until March 31, 2021)³
+Appointments (as of March 31, 2021):
+Finance and IT (until March 31, 2021),
+October 7, 2015 - March 31, 2021¹
+Nationality: German
+FRANK WITTER (*1959)
+Porsche Austria Gesellschaft m.b.H., Salzburg³
+Porsche Holding Gesellschaft m.b.H., Salzburg³
+O Porsche Retail GmbH, Salzburg³
+O Ferrovial S.A., Madrid 2,4
+O FAW-Audi Sales Co., Ltd., Hangzhou³
+O Audi Sport GmbH, Neckarsulm³
+Audi of America, LLC, Herndon / VA (Chair)³
+3
+O TRATON SE, Munich 3.4
+1 Beginning or period of membership of the Board of
+Management.
+2 Appointment outside the Group.
+3 Appointment within the Group.
+O Porsche Austria Gesellschaft m.b.H., Salzburg
+(Chair)³
+Autostadt GmbH, Wolfsburg³
+○ Wolfsburg AG, Wolfsburg³
+O TRATON SE, Munich (Chair) 3,4
+O Dr. Ing. h.c. F. Porsche AG, Stuttgart³
+○ Bertelsmann SE & Co. KGaA, Gütersloh²
+○ Bertelsmann Management SE, Gütersloh²
+○ AUDI AG, Ingolstadt³
+Appointments:
+October 7, 2015¹, elected until 2026
+Nationality: Austrian
+Chair of the Executive Board of Porsche Automobil
+Holding SE
+Chair (since October 7, 2015),
+HANS DIETER PÖTSCH (*1951)
+of Volkswagen AG)
+or the leaving date from the Supervisory Board
+MEMBERS OF THE SUPERVISORY BOARD
+AND COMPOSITION OF THE COMMITTEES
+(Appointments: as of December 31, 2021
+Corporate Governance
+Group Corporate Governance Declaration
+56
+55
+4 Listed company.
+Audi (China) Enterprise Management Co., Ltd.,
+Beijing
+○ Volkswagen Financial Services AG, Braunschweig³
+○ CARIAD SE, Wolfsburg³
+Appointments (as of February 1, 2022):
+Chair of the Board of Management of
+Volkswagen Group Components,
+January 1, 20211, appointed until 2023
+Nationality: German, Brazilian
+Appointments:
+THOMAS SCHMALL-VON WESTERHOLT (*1964)
+Technology,
+O Volkswagen Immobilien GmbH, Wolfsburg (Chair)³
+O Scania CV AB, Södertälje³
+O Scania AB, Södertälje³
+O FAW-Volkswagen Automotive Co., Ltd, Changchun³
+Autostadt GmbH, Wolfsburg (Chair)³
+• Allianz für die Region GmbH, Braunschweig²
+○ Wolfsburg AG, Wolfsburg (Chair)²
+○ Volkswagen Group Services GmbH, Wolfsburg
+(Chair)³
+O TRATON SE, Munich³,4
+O MAN Truck & Bus SE, Munich³
+○ MAN Energy Solutions SE, Augsburg (Chair)³
+O CARIAD SE, Wolfsburg³
+O AUDI AG, Ingolstadt³
+Appointments:
+Nationality: German
+April 13, 2018¹, appointed until 2026
+Human Resources and Truck & Bus
+GUNNAR KILIAN (*1975)
+Group Corporate Governance Declaration
+○ Dr. Ing. h.c. F. Porsche AG, Stuttgart³
+3 Appointment within the Group.
+4 Listed company.
+○ Volkswagen Group Services GmbH, Wolfsburg³
+O SEAT, S.A., Martorell (Chair)³
+Nationality: German
+February 1, 2022¹, appointed until 2025
+Sales (since February 1, 2022)
+HILDEGARD WORTMANN (*1966)
+● SEAT, S.A., Martorell (until September 30, 2021)³
+(until May 26, 2021)²
+O Grizzlys Wolfsburg GmbH, Wolfsburg
+O TRATON SE, Munich (until September 30, 2021)³,4
+○ Mitteldeutsche Flughafen AG, Leipzig
+(Chair, since November 8, 2021)²
+○ MAN Energy Solutions SE, Augsburg³
+O Dr. Ing. h.c. F. Porsche AG, Stuttgart³
+O CARIAD SE, Wolfsburg³
+Appointments (as of January 31, 2022):
+O AUDI AG, Ingolstadt³
+OKühne + Nagel International AG, Schindellegi², 4
+O RWE AG, Essen 2,4
+O CARIAD SE, Wolfsburg³
+Appointments (as of February 1, 2022):
+February 1, 2022¹, appointed until 2025
+Nationality: German
+IT (since February 1, 2022)
+HAUKE STARS (*1967)
+O Sitech Sp. z o.o., Polkowice (Chair)³
+○ Wolfsburg AG, Wolfsburg²
+HILTRUD DOROTHEA WERNER (*1966)
+Integrity and Legal Affairs (until January 31, 2022)
+February 1, 2017 - January 31, 2022¹
+Nationality: German
+Chair of the Group Works Council of MAN SE,
+ATHANASIOS STIMONIARIS (*1971)
+5,679,781.00
+1,120,404.00
+5,090,832.00
+7,000,000.00
+100.0
+3,970,428.00
+59.1
+2,347,380.00
+40.9
+1,623,048.00
+5.1
+203,048.00
+35.8
+1,420,000.00
+%
+€
+2021
+Chair of the Board of Management of AUDI AG,
+Premium brand group
+MARKUS DUESMANN
+Corporate Governance
+Fringe benefits
+Base salary
+Fixed remuneration components
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+Maximum remuneration
+Total remuneration including pension expenses
+Pension expenses
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Special payments
+X
+x
+X
+GUNNAR KILIAN
+Total remuneration including pension expenses
+Pension expenses
+100.0
+5,331,140.72
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Special payments
+Other remuneration
+25.9
+1,383,318.72
+LTI (performance share plan) 2018-2020
+Multiyear variable remuneration/long-term incentive (LTI)
+44.0
+Other remuneration
+2,347,380.00
+Variable remuneration components
+Total
+30.0
+1,600,442.00
+3.4
+180,442.00
+26.6
+1,420,000.00
+%
+X
+€
+2021
+Human Resources and Truck & Bus
+One-year variable remuneration/annual bonus
+LTI (performance share plan) 2018-2020
+Multiyear variable remuneration/long-term incentive (LTI)
+One-year variable remuneration/annual bonus
+Total
+37.2
+1,600,442.00
+4.2
+180,442.00
+33.0
+1,420,000.00
+%
+X
+X
+X
+X
+€
+Variable remuneration components
+2021
+OLIVER BLUME
+Fringe benefits
+Base salary
+Fixed remuneration components
+5,250,000.00
+883,496.00
+3,844,795.00
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+Maximum remuneration
+Total remuneration including pension expenses
+Pension expenses
+100.0
+2,961,299.00
+59.5
+Chair of the Executive Board of
+Dr. Ing. h.c. F. Porsche AG
+Sport & Luxury brand group
+Maximum remuneration
+One-year variable remuneration/annual bonus
+54.6
+Variable remuneration components
+Total
+Fringe benefits
+Base salary
+Fixed remuneration components
+Remuneration Report 2021
+66
+X
+X
+7,000,000.00
+X
+5,391,610.72
+X
+2,347,380.00
+1,092,470.00
+4,299,140.72
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+Maximum remuneration
+Total remuneration including pension expenses
+Pension expenses
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Special payments
+Other remuneration
+8.2
+351,318.72
+LTI (performance share plan) 2018-2020
+Multiyear variable remuneration/long-term incentive (LTI)
+100.0
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+1,309,055.00
+X
+355,000.00
+32.0
+45,012.00
+4.1
+400,012.00
+36.1
+586,845.00
+52.9
+122,517.07
+11.0
+1,109,374.07
+100.0
+271,099.00
+1,380,473.07
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+1,750,000.00
+x
+X
+X
+1,930,068.28
+37.9
+2,149,931.72
+28.2
+1,599,781.00
+3.2
+179,781.00
+25.0
+1,420,000.00
+%
+X
+€
+Maximum remuneration
+Pension expenses
+34.0
+100.0
+1,261,258.00
+X
+6,941,039.00
+X
+7,000,000.00
+X
+X
+68
+Remuneration Report 2021
+Corporate Governance
+FRANK WITTER
+Total remuneration including pension expenses
+Finance and IT (until March 31, 2021)
+%
+Fixed remuneration components
+Base salary
+Fringe benefits
+Total
+Variable remuneration components
+One-year variable remuneration/annual bonus
+Multiyear variable remuneration/long-term incentive (LTI)
+LTI (performance share plan) 2018-2020
+Other remuneration
+Special payments
+Special benefits paid to new Board of Management members
+Total remuneration granted and owed
+2021
+1,760,535.00
+2021
+HILTRUD DOROTHEA WERNER
+Maximum remuneration
+Total remuneration including pension expenses
+Pension expenses
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Special payments
+Other remuneration
+LTI (performance share plan) 2018–2020
+Multiyear variable remuneration/long-term incentive (LTI)
+One-year variable remuneration/annual bonus
+Variable remuneration components
+Total
+Fringe benefits
+Clawback in accordance with section 162 (1) sentence 2 no. 4 of the AktG
+Base salary
+%
+€
+2021
+Chair of the Board of Management of
+Volkswagen Group Components
+Technology,
+THOMAS SCHMALL-VON WESTERHOLT
+67
+Remuneration Report 2021
+Corporate Governance
+X
+7,000,000.00
+x
+6,640,195.72
+Fixed remuneration components
+Integrity and Legal Affairs
+1,420,000.00
+180,235.00
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+Maximum remuneration
+Total remuneration including pension expenses
+Pension expenses
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Special payments
+Other remuneration
+LTI (performance share plan) 2018-2020
+Multiyear variable remuneration/long-term incentive (LTI)
+One-year variable remuneration/annual bonus
+Variable remuneration components
+Total
+36.0
+Fringe benefits
+Fixed remuneration components
+X
+X
+X
+X
+1,040,965.00
+4,988,580.00
+7,000,000.00
+100.0
+3,947,615.00
+59.5
+2,347,380.00
+40.5
+1,600,235.00
+4.6
+Base salary
+40.5
+X
+4.6
+• New Board of Management members did not receive any special benefits in the past
+• Minimum remuneration guarantee
+• Benefits in connection with a relocation
+• Payments to compensate for declining variable remuneration or other financial
+disadvantages
+• Only on the basis of a separate contractual agreement with the new Board of
+Management member
+• There are currently no special payment agreements with Board of Management
+members.
+• The agreement is made in advance for the fiscal year and defines performance
+criteria for the special payment.
+• Only on the basis of a separate contractual agreement with the Board of
+Management member
+• If the service contract ends before the end of the performance period due to a bad
+leaver case (extraordinary termination for cause or a breach of a contractual or post-
+contractual restraint on competition), all performance shares will be forfeited.
+• Calculation of the payment amount: fixed performance shares are multiplied by the
+arithmetic mean of the closing prices of Volkswagen's preferred shares in the Xetra
+trading system of Deutsche Börse AG on the last 30 trading days prior to the end of
+the performance period ("closing reference price") and the dividends paid out per
+Volkswagen preferred share during the performance period ("dividend equivalent")
+• Payment: In cash in the month following approval of the consolidated financial
+statements for the last fiscal year of the respective performance period.
+• Determination of one-quarter of the allocated performance shares at the end of each
+fiscal year depending on EPS target achievement
+• Target-setting: At the start of the performance period, the Supervisory Board defines
+minimum, target and maximum values for EPS as presented in the annual report as
+audited, fully diluted earnings per Volkswagen preferred share from the Company's
+continuing and discontinued operations; the EPS minimum corresponds to target
+achievement of 50%, the EPS target corresponds to target achievement of 100% and
+the EPS maximum corresponds to target achievement of 150%.
+• Allocation of performance shares: At the start of each fiscal year, the individually
+agreed target amount is divided by the arithmetic mean of the closing prices of Volks-
+wagen's preferred shares (German Securities Identification Number: 766403) in the
+Xetra trading system of Deutsche Börse AG on the last 30 trading days prior to
+January 1 in the respective performance period (initial reference price).
+Target
+• Cap: 200% of the target amount
+• Performance period: measured forward over four years¹
+• Plan type: Phantom performance share plan
+Composition
+of their service
+contracts
+or for the entire term
+defined period of time
+members for a
+Management
+Benefits agreed with
+new Board of
+Other services
+Special payment
+Long-term incentive
+(LTI)
+Component
+Remuneration Report 2021
+• Chair of the Board of Management: €3,830,000; Board of Management member:
+€1,800,000
+Corporate Governance
+The long-term incentive serves to align the
+remuneration of the Board of Management
+members with the Company's long-term
+performance. The financial performance
+target EPS (earnings per share) in
+conjunction with share price performance
+and the dividends paid, measured over four
+years, ensures the long-term effect of the
+behavioral incentives and supports the
+strategic target of achieving competitive
+profitability.
+(Compensation) payments are designed to
+attract qualified candidates.
+> Herbert Diess, Chair of the Board of Management since
+April 13, 2018, member of the Board of Management since
+July 1, 2015
+1. Board of Management members in fiscal year 2021
+The members of the Volkswagen AG Board of Management in
+fiscal year 2021 were as follows:
+III. Remuneration of the Board of Management members appointed in
+fiscal year 2021
+1 For the Board of Management members already appointed prior to December 14, 2020, penalty and clawback rules only apply once their contracts have been renewed.
+The cap on cash remuneration is intended to
+prevent unacceptably high disbursements in
+the individual fiscal year.
+The aim of the maximum remuneration is to
+ensure that the remuneration of Board of
+Management members is not
+inappropriately high when measured
+against the peer group.
+Penalty and clawback rules are intended to
+counteract individual misconduct and
+negligence on the part of the organization.
+Target
+• For Board of Management members €5,500,000 (gross) per fiscal year and for the
+chair of the Board of Management €10,000,000 (gross) per fiscal year.
+• The cash remuneration includes the base salary paid in the respective fiscal year, the
+annual bonus granted for the respective fiscal year and paid out in the following year,
+the performance share plan paid in the respective fiscal year and any special payment
+granted for the respective fiscal year.
+• Additional to maximum remuneration
+• If the maximum remuneration is exceeded, the annual bonus will be reduced; if a
+reduction is not sufficient, the Supervisory Board may, at its discretion, reduce other
+remuneration components or request repayment of remuneration paid out.
+• For Board of Management members €7,000,000 (gross) per fiscal year and for the
+chair of the Board of Management €12,000,000 (gross) per fiscal year
+Special payments are intended to reward
+outstanding and exceptional performance
+and may only be granted if they are in the
+Company's interest and are associated with
+future benefits for the Company.
+• The relevant components are the base salary paid for the respective fiscal year, the
+fringe benefits granted, the service cost for occupational retirement provision, the
+annual bonus granted for the respective fiscal year and paid out in the following year,
+the performance share plan paid out in the respective fiscal year and for which the
+performance period ended immediately before the respective fiscal year, any special
+payment granted for the respective fiscal year and any benefits granted to new Board
+of Management members.
+• The Supervisory Board can reduce or request repayment of the annual bonus and LTI
+by up to 100% in the event of relevant misconduct during the assessment period.
+Composition
+Cap on cash
+remuneration
+remuneration
+Maximum
+Other remuneration provisions
+Penalty and clawback
+rules¹
+Component
+Corporate Governance
+Remuneration Report 2021
+62
+61
+1 For the Board of Management members already appointed prior to December 14, 2020, a three-year performance period continues to apply until their contracts are renewed. In all
+other respects, the performance share plan corresponds mutatis mutandis to that described for fiscal year 2021.
+fiscal year.
+• A clawback is not permissible if more than three years have elapsed since the bonus
+was paid.
+> Murat Aksel, member of the Board of Management since
+January 1, 2021
+Integration of the sustainability targets
+takes the importance of ESG factors into
+account.
+The annual bonus is designed to motivate
+Board of Management members to pursue
+ambitious targets.
+retirement provision
+Occupational
+Fringe benefits
+Base salary
+Corporate Governance
+Target
+Fixed remuneration components
+Composition
+Component
+REMUNERATION SYSTEM FOR 2021
+Remuneration Report 2021
+60
+The table below provides an overview of the components of
+the remuneration system applicable for fiscal year 2021 for
+the members of the Board of Management. The table also
+outlines the composition of the individual remuneration
+components and explains their targets, particularly in respect
+of how the remuneration will promote the Company's long-
+term performance. A more detailed description of the
+remuneration system applicable for fiscal year 2021 for
+the members of the Board of Management is available at
+www.volkswagenag.com/en/Investor Relations/corporate-gover-
+nance/Remuneration.html.
+• Twelve equal installments payable at month-end
+II. Overview of the remuneration components
+The level of the Board of Management remuneration
+should be appropriate and attractive in the context of the
+Company's national and international peer group. Criteria
+include the tasks of the individual Board of Management
+member, their personal performance, the economic situ-
+ation, and the performance of and outlook for the Volks-
+wagen Group, as well as how customary the remuneration is
+when measured against the peer group and the remuneration
+structure that applies to other areas of the Volkswagen Group.
+In this context, comparative studies on remuneration are
+conducted on a regular basis.
+already appointed continues to have only a three-year perfor-
+mance period but otherwise corresponds to the performance
+share plan described in this system. Penalty and clawback
+rules will only apply to Board of Management members
+already appointed on renewal of their contracts.
+The new remuneration system has applied since January
+1, 2021 to all Board of Management members with service
+contracts newly concluded or renewed after the Supervisory
+Board resolution of December 14, 2020. For the Board of
+Management members already appointed at the time of the
+resolution by the Supervisory Board on December 14, 2020,
+the new remuneration system also applies in principle from
+January 1, 2021. Until such time as their contracts are
+renewed, however, the following exceptions apply: the per-
+formance share plan of the Board of Management members
+I. Principles of Board of Management remuneration
+The remuneration of the Board of Management is based on
+the remuneration system developed by the Supervisory
+Board and adopted on December 14, 2020 with effect from
+January 1, 2021. The remuneration system for the members
+of the Board of Management implements the requirements
+of the AktG as amended by ARUG II and takes into account
+the recommendations of the German Corporate Governance
+Code (the Code) in the version dated December 19, 2019
+(which entered into force on March 20, 2020). The Annual
+General Meeting approved the remuneration system on July
+22, 2021 with 99.61% of the votes cast.
+Throughout the reporting period, the Volkswagen Group's
+business was impacted by the effects of the Covid-19
+pandemic and in particular by limited vehicle availability due
+to the semiconductor shortage. In this environment, the
+Volkswagen Group's deliveries declined year-on-year. Mean-
+while, the operating result improved versus the prior year
+due to margin and mix effects. The Board of Management
+members also benefited from this in their remuneration.
+1,200,764.00
+A. REMUNERATION OF THE MEMBERS OF THE BOARD OF
+For fiscal year 2021, the Board of Management and Supervisory Board of Volkswagen AG have, for
+the first time, prepared a remuneration report in accordance with section 162 of the Aktiengesetz
+(AktG - German Stock Corporation Act) as amended by the Gesetz zur Umsetzung der zweiten
+Aktionärsrechterichtlinie (ARUG II – German Act on the Implementation of the Second Shareholders'
+Rights Directive). In this report, we explain the main features of the remuneration system for the
+members of the Board of Management and Supervisory Board. The remuneration report also
+contains an individualized breakdown of the remuneration components provided to current
+and former members of the Board of Management and Supervisory Board.
+-
+Remuneration Report 2021
+59
+Remuneration Report 2021
+Corporate Governance
+In this chapter, we provide an overview of the remuner-
+ation system for the Board of Management members in fiscal
+year 2021 before going into the components of the remu-
+neration in fiscal year 2021.
+The financial performance targets support
+the strategic target of achieving competitive
+profitability.
+• Chair of the Board of Management: €2,235,000; Board of Management member:
+€1,420,000
+。 Company cars
+The occupational retirement provision is
+intended to provide Board of Management
+members with an adequate pension when
+they retire.
+The basic remuneration and fringe benefits
+are intended to reflect the tasks and
+responsibility of the Board of Management
+members, provide a basic income and
+prevent them from taking inappropriate
+risks.
+1 Equity-accounted companies in China.
+• Payment: In cash in the month following approval of the consolidated financial
+statements for the fiscal year in question
+• Annual bonus payment amount = individual target amount x financial target
+achievement x ESG factor
+■ The Supervisory Board sets the Governance factor after the end of the fiscal year
+taking into account the collective performance of the Board of Management as a
+whole and the performance of each Management Board member individually.
+■ Calculation of the ESG factor: (Environment subtarget achievement x 50% +
+Social subtarget achievement x 50%) x Governance factor (0.9-1.1)
+■ The Supervisory Board defines minimum, target, and maximum values for the
+Environment and Social subtargets for each fiscal year. The minimum, target,
+and maximum values correspond to subtarget achievement of 0.7, 1.0, and 1.3,
+respectively; interim values are interpolated on a linear basis.
+■ Subtargets of 50% each for the Environment (decarbonization index) and Social
+(sentiment rating and diversity index) as well as the Governance factor between
+0.9 and 1.1 (compliance & integrity, standard value of 1.0)
+。 ESG factor
+■ Overall financial target achievement = subtarget achievement "operating result
+including Chinese joint ventures (proportionate)" x 50% + "subtarget
+achievement operating return on sales" x 50%
+■ The Supervisory Board defines minimum, target, and maximum values for the
+financial subtargets for each fiscal year. The minimum corresponds to subtarget
+achievement of 0% of the OR including Chinese joint ventures (proportionate) or
+50% of the operating return on sales, while the target corresponds to a
+subtarget achievement of 100% in each case and the maximum to subtarget
+achievement of 150%; interim values are interpolated on a linear basis.
+■ Operating result (OR) incl. Chinese joint ventures¹ (proportionate) (50%) and
+operating return on sales (50%)
+。 Financial subtargets:
+• Fringe benefit allowance (€175,000) covers certain benefits at the discretion of the
+Board of Management member, for example:
+• Performance criteria:
+• Cap: 180% of the target amount
+• Chair of the Board of Management: €3,045,000; Board of Management member:
+€1,350,000
+Plan type: Target bonus
+Annual bonus
+Variable remuneration components
+• Annual pension contribution of 40% of the contractually agreed base salary (or 50%
+in the case of Board of Management members who took office before January 1,
+2018)
+• Normally when the members reach the age of 65 (or 63 in the case of Board of
+Management members who took office before January 1, 2020)
+• Defined contribution plan by means of direct commitments to retirement, disability
+and surviving dependents' benefits
+• Payment of the remaining amount
+• Crediting of benefits against the fringe benefit allowance where these are subject to
+payroll tax
+o Accident insurance
+。 Allowances for health and long-term care insurance
+o Preventive medical check-ups
+• Assessment period: fiscal year
+> Arno Antlitz, member of the Board of Management since
+April 1, 2021
+MANAGEMENT
+> Markus Duesmann, member of the Board of Management
+since April 1, 2020, also Chair of the Board of Management
+of AUDI AG
+59.5
+2,347,380.00
+40.5
+1,600,481.00
+4.6
+180,481.00
+36.0
+1,420,000.00
+%
+€
+2021
+X
+X
+3,947,861.00
+x
+Purchasing
+MURAT AKSEL
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+Maximum remuneration
+Total remuneration including pension expenses
+Pension expenses
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Special payments
+Other remuneration
+LTI (performance share plan) 2018-2020
+Multiyear variable remuneration/long-term incentive (LTI)
+One-year variable remuneration/annual bonus
+X
+Variable remuneration components
+100.0
+X
+> Oliver Blume, member of the Board of Management since
+April 13, 2018, also Chair of the Executive Board of Dr. Ing.
+h.c. F. Porsche AG
+135,764.00
+36.0
+1,065,000.00
+%
+€
+2021
+Finance and IT (since April 1, 2021)
+ARNO ANTLITZ
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Other remuneration
+LTI (performance share plan) 2018-2020
+1,076,359.00
+Multiyear variable remuneration/long-term incentive (LTI)
+Variable remuneration components
+Total
+Fringe benefits
+Base salary
+Fixed remuneration components
+65
+Remuneration Report 2021
+Corporate Governance
+X
+X
+7,000,000.00
+x
+5,024,220.00
+One-year variable remuneration/annual bonus
+Total
+Special payments
+Base salary
+Board of Management service contracts that are new or
+have been renewed since the Supervisory Board adopted the
+new remuneration system for the members of the Board of
+Management on December 14, 2020 also contain the penalty
+and clawback rules provided for in this remuneration system.
+The service contracts of the Board of Management members
+Ms. Werner, Mr. Blume and Mr. Duesmann, who were already
+appointed as of December 14, 2020, therefore do not contain
+penalty or clawback rules, nor did Mr. Witter's service
+contract, which ended on June 30, 2021. Volkswagen AG did
+not make use of the existing penalty and clawback rules in
+fiscal year 2021.
+64
+Remuneration Report 2021
+Fixed remuneration components
+Base salary
+Fringe benefits
+Total
+Corporate Governance
+HERBERT DIESS
+Chair,
+Volume brand group,
+China
+2021
+€
+%
+2,235,000.00
+Maximum remuneration corresponds to maximum
+remuneration within the meaning of section 87a(1) sentence
+2 no. 1 of the AktG in accordance with the remuneration
+system adopted by the Supervisory Board and approved by
+the Annual General Meeting. As in the past, in addition to
+maximum remuneration, a limit on cash remuneration,
+which includes the base salary paid out for the relevant fiscal
+year, the annual bonus granted for the relevant fiscal year
+and paid out in the subsequent year, the performance share
+plan paid out in the relevant fiscal year and any special
+payment granted for the relevant fiscal year, has been agreed
+with the members of the Board of Management.
+Pension expense is reported as service cost within the
+meaning of IAS 19. The service cost in accordance with IAS 19
+does not constitute remuneration granted or owed within the
+meaning of section 162(1) sentence 1 of the AktG as it is not
+actually received by the Board of Management member in
+the reporting year.
+time at which the respective remuneration component was
+paid out.
+The relative shares shown in the tables relate to the
+remuneration components granted and owed in the
+respective fiscal year in accordance with section 162(1)
+sentence 1 of the AktG. They thus include all benefits actually
+received in the respective fiscal year, regardless of the fiscal
+year for which the Board of Management members received
+them. The relative shares indicated here are thus not
+comparable with the respective relative shares of fixed and
+variable remuneration components as part of total remu-
+neration in the description of the remuneration system
+according to section 87a(1) sentence 2 no. 3 of the AktG. The
+shares indicated in the remuneration system relate to the
+targets agreed for the relevant fiscal year, irrespective of the
+> Gunnar Kilian, member of the Board of Management since
+April 13, 2018
+Fringe benefits
+> Thomas Schmall-von Westerholt, member of the Board of
+Management since January 1, 2021
+> Hiltrud Dorothea Werner, member of the Board of
+Management since February 1, 2017
+> Frank Witter, member of the Board of Management from
+October 7, 2015, left the Board effective March 31, 2021
+For their work on the Board of Management, its members do
+not receive additional remuneration for discharging other
+mandates on management bodies, supervisory boards or
+similar, especially in other companies of the Volkswagen
+Group. If such remuneration is nevertheless granted, it is
+counted toward the remuneration for their work as a mem-
+ber of the Board of Management of Volkswagen AG.
+2. Remuneration granted and owed in fiscal year 2021
+26.0
+In accordance with section 162(1) sentence 1 of the AktG, the
+remuneration report must report on the remuneration
+granted and owed to each individual member of the Board of
+Management in the last fiscal year. These terms are under-
+stood as follows:
+> The term "owed" (geschuldet) refers to all legally existing
+liabilities for remuneration components that are due but
+have not yet been fulfilled.
+> This understanding differs from the terms "benefits
+granted” and “benefits received” used in previous remu-
+neration reports. As per the 2017 version of the Code,
+"benefits granted” included, regardless of when they were
+to be paid out, all remuneration components that had been
+agreed at least in principle for a member of the Board of
+Management in the fiscal year and for which the amount
+Corporate Governance
+63
+could be estimated. With the introduction of section 162 of
+the AktG, it is no longer possible to maintain the distinc-
+tion between "granted" and "received" as previously
+understood. Instead, the meaning of the term "granted" in
+section 162 of the AktG corresponds to the previous
+understanding of "received".
+2.1. Overview in the tables
+The following tables show the remuneration actually received
+by members of the Board of Management in fiscal year 2021.
+The time of actual payment is not relevant. The remuneration
+reported as granted in fiscal year 2021 thus consists of the
+base salary paid out in fiscal year 2021, the fringe benefits,
+the annual bonus paid in the month following the approval
+of the Company's consolidated financial statements for fiscal
+year 2021 and the LTI for the performance period 2018 to
+2020 paid in fiscal year 2021. As the Company was not in
+default on the payment of remuneration components, no
+remuneration owed is reported in the tables.
+> The term "granted" (gewährt) refers to the actual receipt
+(Zufluss) of the remuneration component.
+178,231.00
+Remuneration Report 2021
+2,413,231.00
+Pension expenses
+100.0
+8,594,545.16
+Total remuneration granted and owed
+Special benefits paid to new Board of Management members
+Special payments
+Clawback in accordance with section 162(1) sentence 2 no. 4 of the AktG
+2.1
+Total remuneration including pension expenses
+Fixed remuneration components
+1,717,037.00
+10,311,582.16
+12,000,000.00
+Maximum remuneration
+Other remuneration
+28.1
+Variable remuneration components
+10.3
+One-year variable remuneration/annual bonus
+886,668.16
+5,294,646.00
+61.6
+Multiyear variable remuneration/long-term incentive (LTI)
+LTI (performance share plan) 2018-2020
+1,309,055.00
+year 2021
+1,076,359.00
+4,313,101.00
+1,717,037.00
+1,076,359.00
+883,496.00
+883,496.00
+3,669,616.00
+1,741,168.00
+1,120,404.00
+8,736,404.00
+1,092,470.00
+Corporate Governance
+1,040,965.00
+Remuneration Report 2021
+PENSIONS OF THE MEMBERS OF THE BOARD OF MANAGEMENT IN 2021 IN ACCORDANCE WITH IAS 19
+€
+Herbert Diess
+Murat Aksel
+Arno Antlitz (since April 1, 2021)
+Pension expenses in fiscal
+Oliver Blume
+Gunnar Kilian
+Thomas Schmall-von Westerholt
+Hiltrud Dorothea Werner
+Frank Witter (until March 31, 2021)
+Total
+Cash value
+Markus Duesmann
+1,040,965.00
+The members of the Board of Management are also entitled
+to a pension and to a surviving dependents' pension as well
+as the use of company cars for the period in which they
+receive their pension in the event of early termination of
+their service on the Board of Management.
+1,261,258.00
+The overview on the previous page shows the pensions
+for the individual members of the Board of Management in
+fiscal year 2021, indicating the present value and the pension
+expense for the Company during the last fiscal year.
+c) Benefits and pension commitments to Board of Management members
+who left in fiscal year 2021
+Mr. Witter left in fiscal year 2021. He was originally appointed
+as a member of the Volkswagen AG Board of Management
+until the end of June 30, 2021. Mr. Witter's appointment to
+the Board of Management of Volkswagen AG was terminated
+early by mutual agreement, effective March 31, 2021. Due to
+this termination, Volkswagen AG concluded a termination
+agreement with Mr. Witter. The subject of this termination
+agreement included the continuation of his service contract
+until its regular termination date, i.e. until the end of June 30,
+2021. Volkswagen AG agreed to continue paying Mr. Witter
+his monthly base salary until the termination date of his
+service contract and to grant the annual bonus for 2021 and
+the LTI for the performance period 2021-2023 on a pro rata
+basis (6/12). Until the end of his service contract, Mr. Witter
+retained private use of his company cars and was entitled to
+fringe benefits.
+2.2.4 No clawback claims in fiscal year 2021
+Volkswagen AG did not seek to claw back any variable
+remuneration components from individual Board of
+Management members in fiscal year 2021. The prerequisites
+for a clawback claim did not apply.
+IV. Remuneration of former Board of Management members
+In accordance with section 162(1) sentence 1 of the AktG, the
+remuneration granted and owed to former members of the
+Board of Management must also be reported.
+1. Remuneration granted and owed in fiscal year 2021
+(individualized)
+Under section 162(5) sentence 2 of the AktG, the obligation to
+report individually on the remuneration granted and owed to
+former Board of Management members also extends to
+remuneration granted and owed in the ten years after their
+most recent term of office on the Board of Management or
+Supervisory Board at Volkswagen AG.
+The following tables show the remuneration granted and
+owed in fiscal year 2021 to the individual former members of
+the Board of Management who left after fiscal year 2011. As
+with the current Board of Management members, the annual
+bonus paid at the beginning of 2022 to former Board of
+Management members for the 2021 fiscal year is counted as
+remuneration granted in fiscal year 2021.
+2. Total remuneration granted to former Board of Management members
+Section 162(5) sentence 2 of the AktG does not require the
+Company to report individually on the remuneration granted
+and owed in 2021 to former members of the Board of
+Management whose most recent term of office on the Board
+of Management or Supervisory Board at Volkswagen AG came
+to an end before the beginning of 2012 and who were then
+granted and owed remuneration for more than ten years after
+leaving Volkswagen AG. A total of €9.1 million was granted
+and owed to such former Board of Management members
+and their surviving dependents in fiscal year 2021.
+Obligations for pensions for this group of persons measured
+in accordance with IAS 19 amounted to €119.9 million.
+76
+Remuneration Report 2021
+74
+Corporate Governance
+There were no changes to these commitments in fiscal
+year 2021.
+The individual pension modules vest immediately upon
+payment to Volkswagen Pension Trust e.V. Instead of a
+lifelong pension, benefits can optionally be paid out as a
+lump sum or in installments when the beneficiary reaches
+retirement age. Volkswagen AG has assumed responsibility
+for pension entitlements due to Mr. Witter from the time
+before his service with the Company. The earliest point at
+which he can draw his pension is when he reaches the age
+of 60; for his other pension entitlements, the earliest point at
+which Mr. Witter may retire is at the age of 62.
+271,099.00
+27,185,361.00
+9,772,143.00
+2.2.3 Benefits and pension commitments in connection with
+termination
+a) Benefits and pension commitments to Board of Management members
+for early termination
+5,724,252.00
+-
+b) Pension commitments to Board of Management members for regular
+termination of service
+In the event of regular termination of their service on the
+Board of Management, the members of the Board of Manage-
+ment are entitled to a pension, including a surviving
+dependents' pension, as well as the use of company cars for
+the period in which they receive their pension. The agreed
+benefits are paid or made available when the Board of
+Management member reaches the age of 63, or in Mr. Dues-
+mann's, Mr. Aksel's, Mr. Schmall-von Westerholt's and
+Mr. Antlitz's case, when they reach the age of 65.
+The Board of Management members received a defined
+contribution plan, which is based in principle on a works
+agreement that also applies to the employees of Volks-
+wagen AG covered by collective agreements and includes
+retirement, invalidity and surviving dependents' benefits. A
+pension contribution in the amount of 50% of the base salary
+for Ms. Werner and Mr. Diess and in the amount of 40% of
+the base salary for Mr. Aksel, Mr. Blume, Mr. Duesmann,
+Mr. Kilian, Mr. Schmall-von Westerholt and Mr. Antlitz is paid
+to Volkswagen Pension Trust e.V. at the end of the calendar
+year for each year they are appointed to the Board of Man-
+agement. The pension contribution for Mr. Witter was 50%.
+The annual pension contributions result in modules of what
+is, in principle, a lifelong pension in line with the arrange-
+ments that also apply to employees covered by collective
+agreements.
+Corporate Governance
+Remuneration Report 2021
+75
+The remuneration system for the members of the Board of
+Management and the service contracts of the Board of
+Management members provide for severance payments in
+the event that an appointment as member of the Board of
+Management is revoked. In such cases - except where there is
+good cause entitling the Company to terminate the service
+contract prematurely or where the appointment is revoked
+due to a gross breach of duty – the Board of Management
+member receives a gross severance payment in the amount
+of the total remuneration of the past financial year up to the
+end of the regular term of the appointment, for a maximum
+of two years, calculated as of the date of the termination of
+the appointment as member of the Board of Management.
+Any special payment will not be taken into account for the
+calculation. Should a Board of Management member leave
+during the course of the first fiscal year of the appointment,
+the calculation will by way of exception be based on the
+expected total remuneration for the current fiscal year. The
+severance payment will be paid in a maximum of 24 monthly
+installments from the time of the termination of the
+appointment as a member of the Company's Board of Man-
+agement. Contractual remuneration paid by the Company for
+the period from the termination of the appointment until the
+end of the service contract will be offset against the severance
+payment. Should Board of Management members take up
+other work after the termination of their appointment, the
+amount of the severance payment will be reduced by the
+amount of the income earned from that work. Should a post-
+contractual non-compete covenant be agreed, the severance
+payment will be offset against the compensation received for
+observing the post-contractual non-compete covenant.
+The remuneration granted and owed to the Board of
+Management members in fiscal year 2021 meets the
+requirements of the remuneration system for the members
+of the Board of Management. There was no deviation from
+the applicable remuneration system in fiscal year 2021. There
+was no need to reduce the payments related to the annual
+bonus and performance share plan, as they did not exceed
+180% of the target amount for the annual bonus or 200% of
+the target amount for the performance share plan. The total
+remuneration granted and owed to the Board of Man-
+agement members in fiscal year 2021 did not exceed the
+maximum remuneration envisaged by the remuneration
+system. Due to the base salary paid out for fiscal year 2021,
+the annual bonus granted for fiscal year 2021 and paid out at
+the beginning of fiscal year 2022, and the performance share
+plan paid out in fiscal year 2021 for the 2018 to 2020
+performance period, Board of Management member
+Ms. Werner would have received total cash remuneration
+above the agreed cash remuneration cap of €5.5 million gross
+in fiscal year 2021. Against this background, the payment
+amount from the annual bonus was reduced by the excess
+amount of €197,448.28. The table entitled "Remuneration
+granted and owed" therefore shows the reduced annual
+bonus amount for Ms. Werner. The Supervisory Board of
+Volkswagen AG reappointed Mr. Diess as a member of the
+Board of Management in fiscal year 2021 with effect from the
+beginning of July 10, 2021 and named him Chair of the Board
+of Management, thereby ending his existing appointment
+with effect from the end of July 9, 2021. A new service
+contract was concluded in this context, the terms of which
+correspond to the remuneration system applicable to
+members of the Volkswagen AG Board of Management from
+January 1, 2021. A four-year performance share plan has thus
+applied to Mr. Diess since July 10, 2021. For fiscal year 2021,
+the LTI was therefore based pro rata on a three-year
+performance share plan up to and including July 9, 2021 and
+a four-year performance share plan from July 10, 2021. The
+penalty and clawback rules were consequently only appli-
+cable as from July 10, 2021. Volkswagen AG also reappointed
+Mr. Kilian as a member of the Board of Management with
+effect from the beginning of December 10, 2021, thereby
+ending his existing appointment with effect from the end of
+December 9, 2021. A new service contract was concluded in
+this context, the terms of which correspond to the remu-
+neration system applicable to members of the Volkswagen AG
+Board of Management from January 1, 2021. In line with the
+arrangements for Mr. Diess, a four-year performance share
+plan applied pro rata to Mr. Kilian starting on December 10,
+2021, along with the penalty and clawback rules.
+169.42
+In the introductory phase of the performance share plan, the
+members of the Board of Management who were Board
+members as of December 31, 2016 generally received
+advances of 80% of their target amount for the 2017 to 2019
+and 2018 to 2020 performance periods. Mr. Blume received
+corresponding advances for the performance periods 2018 to
+2020 (proportionate) and 2019 to 2021. The advances were
+paid after the first year of the relevant performance period.
+Final settlement is based on actual achievement of targets at
+the end of the relevant three-year performance period.
+cc) Reference prices/dividend equivalent for the performance periods
+The relevant initial reference price, closing reference price
+and dividend equivalent for the performance period 2018-
+2020 can be found in the following overview.
+73
+Remuneration Report 2021
+Corporate Governance
+148
+Target achievement (in %)
+29.65
+Actual
+10.0
+Minimum value
+20.0
+100% target level
+30.0
+Maximum value
+Initial reference price
+Closing reference price
+20.0
+2021
+148
+29.65
+10.0
+20.0
+30.0
+2021
+148
+83
+29.65
+16.66
+10.0
+10.0
+20.0
+Pension payments
+2.2.2 Conformity with the remuneration system
+Dividend equivalent
+2019
+2020
+4.86
+_1
+149.14
+dd) Advances
+1 Determined at the end of the performance period.
+4.86
+4.86
+4.86
+4.86
+4.86
+4.86
+2021
+2020
+2019
+2018
+Dividend equivalent
+177.44
+147.08
+175.75
+Closing reference price
+Initial reference price
+2019-2021 2020-2022 2021-2023 2021-2024
+PERFORMANCE PERIOD
+The following overview shows the initial reference price,
+closing reference price and dividend equivalent for the
+performance share plans not yet due and not yet paid out for
+the performance periods 2019-2021, 2020-2022 and 2021–
+2023 or 2021-2024.
+4.86
+4.86
+3.96
+149.14
+2018-2020
+PERIOD
+PERFORMANCE
+149.14
+Base salary
+Total remuneration granted and owed
+One-year variable remuneration/annual bonus
+19.6
+277,297.32
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+One-year variable remuneration/annual bonus
+1.8
+25,873.18
+Fringe benefits
+Base salary
+78.5
+%
+1,108,800.00
+€
+2021
+MATTHIAS MÜLLER
+100.0
+772,381.98
+4.3
+33,181.98
+95.7
+%
+739,200.00
+€
+2021
+MICHAEL MACHT
+100.0
+141,651.26
+24.4
+34,521.14
+75.6
+Total remuneration granted and owed
+1,411,970.50
+100.0
+78
+30.0
+One-year variable remuneration/annual bonus
+Fringe benefits
+Base salary
+Pension payments
+Total remuneration granted and owed
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+One-year variable remuneration/annual bonus
+P-2021
+LEIF ÖSTLING
+100.0
+693,718.20
+4.9
+33,660.00
+%
+95.1
+%
+2021
+HORST NEUMANN
+Corporate Governance
+Fringe benefits
+Base salary
+Pension payments
+Total remuneration granted and owed
+Severance payments
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+One-year variable remuneration/annual bonus
+Fringe benefits
+Pension payments
+Base salary
+Remuneration Report 2021
+660,058.20
+107,130.12
+€
+2021
+1,236,264.28
+Total remuneration granted and owed
+39.6
+490,068.28
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+One-year variable remuneration/annual bonus
+2.8
+34,128.00
+Fringe benefits
+Base salary
+57.6
+%
+712,068.00
+€
+100.0
+2021
+100.0
+677,248.38
+72.4
+490,068.28
+0.8
+5,667.50
+26.8
+%
+181,512.60
+2021
+KARLHEINZ BLESSING
+Pension payments
+Total remuneration granted and owed
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+FRANCISCO JAVIER GARCIA SANZ
+Fringe benefits
+Pension payments
+2021
+CHRISTINE HOHMANN-DENNHARDT
+77
+Remuneration Report 2021
+Pension payments
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+One-year variable remuneration/annual bonus
+Fringe benefits
+Base salary
+Pension payments
+Total remuneration granted and owed
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+One-year variable remuneration/annual bonus
+Fringe benefits
+Base salary
+JOCHEM HEIZMANN
+Pension payments
+100.0
+1,247,757.28
+Total remuneration granted and owed
+39.3
+490,068.28
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+One-year variable remuneration/annual bonus
+1.5
+18,489.00
+Fringe benefits
+Base salary
+59.2
+%
+739,200.00
+Corporate Governance
+30.0
+83
+2020
+119
+77.5
+124
+81.5
+Minimum value
+46.9 100% target level
+47.7
+45.5 Maximum value
+2021
+2021
+Diversity index
+Sentiment rating
+SOCIAL
+2021 Points
+Decarbonization index
+ENVIRONMENTAL
+Target achievement (factor)
+100% target level
+Minimum value
+Actual
+Maximum value
+in tCO₂e/vehicle
+internationalization of top management. The indicator
+provides incentives for an exemplary leadership and
+corporate culture. The governance factor is a means for the
+Supervisory Board to express its satisfaction with the
+expected and actual behavior of the Board of Management
+with regard to the criteria of integrity and compliance. As a
+rule, the governance factor should be 1.0 and may only be
+reduced to 0.9 or raised to 1.1 in exceptional circumstances
+based on a professional judgment of the Supervisory Board.
+For fiscal year 2021, the Supervisory Board has set the
+governance factor at the standard value of 1.0 for all current
+Board of Management members; it takes into account and
+assesses the collective performance of the Board of Manage-
+ment as a whole and the performance of each Management
+Board member individually.
+The following overview shows the minimum values, target
+values and maximum values set by the Supervisory Board for
+fiscal year 2021 for the environmental (decarbonization
+index) and social (sentiment rating and diversity index)
+subtargets along with the actual figures and target
+achievement levels in fiscal year 2021. The decarbonization
+index measures the emissions of CO2 and CO2 equivalents by
+the passenger car- and light commercial vehicle-producing
+brands over the entire life cycle and documents the progress
+we are making in improving our carbon footprint. The
+sentiment rating is an important parameter of the opinion
+survey - an employee poll with which the Group regularly
+gathers information regarding employee satisfaction. The
+diversity index is used worldwide to determine the develop-
+ment of the proportion of women in management and the
+bb) ESG factor
+Corporate Governance
+Remuneration Report 2021
+70
+143
+Target achievement (in %)
+133
+Target achievement (in %)
+73.5
+113
+45.9 Actual
+82.3
+PAYMENT OF THE LTI
+Remuneration Report 2021
+EPS per preferred share in €
+Measuring EPS performance over four years
+40
+35
+30
+25
+20
+15
+10
+5
+0
+50
+100
+7.7
+150
+PERFORMANCE PERIOD
+Preliminary number of (phantom)
+performance shares
+=
+performance period)
+Share price (beginning of the
+÷
+Target value in €
+GRANTING OF THE LTI
+LONG-TERM INCENTIVE (LTI): (PHANTOM) PERFORMANCE SHARE PLAN (PSP)
+Corporate Governance
+1.30
+1.30
+1.21 Target achievement (factor)
+127
+EPS PERFORMANCE MEASUREMENT
+Target achievement in percent
+Actual
+22.3
+Actual
+RoS
+½ R
++
+(incl. China,
+proportionate)
+OR
+ENVIRONMENT (E)
+PAYMENT
+69
+Remuneration Report 2021
+ESG
+TARGET ACHIEVEMENT
+×
+TARGET VALUE
+ANNUAL BONUS
+×
+Corporate Governance
+243,848.76
+%
+100.0
+243,848.76
+100.0
+HANS DIETER PÖTSCH
+2021
+814,800.00
+%
+96.8
+26,719.14
+3.2
+841,519.14
+100.0
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+Final number of (phantom)
+performance shares
+½
++ Diversity index
+4.0
+Threshold value
+9.0
+Threshold value
+6.0
+100% target level
+17.0
+100% target level
+8.0
+Maximum value
+25.0
+Maximum value
+2021
+%
+Decarbon-
+ization index
+2021
+€ billion
+COMPONENT 1: OPERATING RESULT INCLUDING
+CHINESE JOINT VENTURES (PROPORTIONATE)
+The following overviews show the threshold values, target
+values and maximum values set by the Supervisory Board for
+fiscal year 2021 for the financial subtargets operating result,
+including Chinese joint ventures (proportionate), and oper-
+ating return on sales (ROS), along with the actual figures and
+target achievement levels in percent in fiscal year 2021.
+aa) Financial subtargets
+a) Performance criteria for the annual bonus
+2.2.1 Performance criteria for variable remuneration
+2.2 Explanation
+multiplier (0.9 1.1)
+multiplier (0.7-1.3)
+_ (0-150% target achievement) _
+Integrity (CI)
+×
+GOVERNANCE (G)
+Compliance /
+SOCIAL (S)
+Sentiment rating/
+COMPONENT 2: OPERATING RETURN ON SALES
+2021
+Share price plus dividends
+(end of performance period)
+Payment in €
+Maximum value
+PERFORMANCE PERIOD 2020-2022
+148
+83
+133
+Target achievement (in %)
+29.65
+16.66
+26.66
+Actual
+10.0
+10.0
+10.0
+Minimum value
+20.0
+20.0
+20.0
+30.0
+30.0
+30.0
+2021
+2020
+2019
+Corporate Governance
+2020
+2019
+2018
+€
+PERFORMANCE PERIOD 2018-2020
+30.0
+30.0
+30.0
+100% target level
+€
+PERFORMANCE PERIOD 2021-2024
+Target achievement (in %)
+Actual
+Minimum value
+100% target level
+Maximum value
+€
+PERFORMANCE PERIOD 2021-2023
+Target achievement (in %)
+Minimum value
+Actual
+100% target level
+The following overviews show the minimum value, target
+value and maximum value set by the Supervisory Board at
+the beginning of the performance periods 2019-2021, 2020-
+2022 and 2021-2023 or 2021-2024 along with the actual
+figures and target achievement levels attained in percent so
+far for the individual years of the assessment period up to
+and including 2021. The performance share plans for the
+performance periods 2019-2021, 2020-2022 and 2020-
+2023 or 2021-2024 were not due in fiscal year 2021 and have
+not yet been paid out; they therefore do not constitute
+remuneration granted or owed in fiscal
+year 2021.
+Maximum value
+100% target level
+€
+118
+Target achievement (in %)
+16.66
+26.66
+23.63
+Actual
+€
+10.0
+10.0
+10.0
+Minimum value
+20.0
+20.0
+20.0
+133
+Maximum value
+€
+PERFORMANCE PERIOD 2019-2021
+12,238
+7,614
+Oliver Blume
+9,052
+Arno Antlitz (since April 1, 2021)
+12,069
+12,313
+13,368
+21,585
+26,040
+19,212
+Murat Aksel (since January 1, 2021)
+Herbert Diess
+Number of
+performance shares
+allocated at the grant
+date
+10,144
+PERFORMANCE
+PERIOD
+2021-2024
+PERFORMANCE
+PERIOD
+2021-2023
+Number of
+performance shares
+allocated at the grant
+date
+Number of
+performance shares
+allocated at the grant
+date
+Number of
+performance shares
+allocated at the grant
+date
+PERIOD
+2020-2022
+PERFORMANCE
+PERIOD
+2019-2021
+PERFORMANCE
+PERIOD
+2018-2020
+PERFORMANCE
+€
+appointed at the time of the Supervisory Board resolution of
+December 14, 2020, a three-year performance period
+continues to apply until their contracts are renewed. This is
+the case for Ms. Werner, Mr. Duesmann, Mr. Blume and Mr.
+Witter. The four-year performance share plan applies pro rata
+from July 10, 2021 for Mr. Diess and pro rata from December
+10, 2021 for Mr. Kilian.
+aa) Information on the performance shares
+b) Performance criteria for the long-term incentive (LTI)
+The four-year performance share plan has applied since
+January 1, 2021 to all Board of Management members with
+service contracts newly concluded or renewed after the
+Supervisory Board resolution of December 14, 2020. This
+includes Mr. Antlitz, Mr. Aksel and Mr. Schmall-von
+Westerholt. For the Board of Management members already
+Number of
+performance shares
+allocated at the grant
+date
+=
+12,069
+7,608
+bb) EPS performance
+The following overview shows the minimum value, target
+value and maximum value set by the Supervisory Board at
+the beginning of the performance period for the performance
+share plan 2018-2020, which was paid out in fiscal year 2021,
+along with the actual figure and target achievement level in
+percent.
+Remuneration Report 2021
+72
+22
+71
+46,230
+63,935
+69,769
+74,992
+55,688
+Total
+3,018
+10,144
+12,238
+Markus Duesmann
+10,624
+12,069
+10,144
+12,238
+10,624
+Hiltrud Dorothea Werner
+12,069
+Thomas Schmall-von Westerholt (since January 1, 2021)
+727
+11,342
+10,144
+12,238
+7,614
+Gunnar Kilian
+12,069
+Frank Witter (until March 31, 2021)
+Total remuneration granted and owed
+.
+China is of major strategic significance to the Volkswagen
+Group as its largest single market, which we expect will
+(45.4%)
+100,000.00
+100,000.00
+Bertina Murkovic²
+(47.1%)
+96,458.33
+100,000.00
+Peter Mosch²
+(92.6%)
+108,000.00
+110,000.00
+(7.4%)
+10,000.00
+(9.1%)
+8,000.00
+100,000.00
+Louise Kiesling
+(90.9%)
+100,000.00
+83,700.00
+162,000.00
+110,000.00
+(8.0%)
+10,000.00
+(9.1%)
+12,000.00
+50,000.00
+(30.9%)
+(61.7%)
+(90.9%)
+100,000.00
+Ulrike Jakob²
+Marianne Heiẞ
+100,000.00
+(46.3%)
+(46.3%)
+Bernd Osterloh (until April 30, 2021)²
+33,055.56
+50,000.00
+100,000.00
+Stephan Weil³
+(91.7%)
+66,666.67
+Athanasios Stimoniaris (until August 31, 2021)²
+(30.9%)
+(61.7%)
+50,000.00
+100,000.00
+Conny Schönhardt²
+(90.6%)
+Hans-Peter Fischer²
+19,166.67
+(30.1%)
+150,000.00
+(57.0%)
+150,000.00
+(56.4%)
+(38.0%)
+100,000.00
+(37.6%)
+Wolfgang Porsche
+100,000.00
+Ferdinand Oliver Porsche
+(60.2%)
+50,000.00
+100,000.00
+Hans Michel Piëch
+(52.7%)
+(42.2%)
+41,319.44
+Jens Rothe (since October 22, 2021)²
+86,308.59
+136,833.33
+11,000.00
+15,000.00
+(3.6%)
+15,000.00
+(5.2%)
+(25.9%)
+(69.0%)
+100,000.00
+75,000.00
+(24.1%)
+100,000.00
+300,000.00
+(72.3%)
+200,000.00
+Hussain Ali Al Abdulla
+Jörg Hofmann²
+Hans Dieter Pötsch
+2021
+COMPANIES¹
+415,000.00
+OTHER GROUP
+2021
+2021
+2021
+2021
+TOTAL
+MEETING
+ATTENDANCE
+FEES
+WORK IN THE
+COMMITTEES
+REMUNERATION
+86
+Remuneration Report 2021
+€ (%)
+Corporate Governance
+REMUNERATION
+FOR SERVING ON
+THE BOARDS OF
+(61.3%)
+498,900.00
+4,000.00
+61,944.44
+(45.3%)
+(46.7%)
+63,888.89
+Daniela Cavallo (since May 11, 2021)²
+Matías Carnero Sojo (since April 1, 2021)4
+27,000.00
+(5.7%)
+2,000.00
+(7.4%)
+(92.6%)
+25,000.00
+Kai Bliesener (until March 31, 2021)²
+(31.4%)
+(62.9%)
+290,000.00
+159,000.00
+50,000.00
+100,000.00
+Bernd Althusmann³
+(5.7%)
+(94.3%)
+106,000.00
+6,000.00
+100,000.00
+Hessa Sultan Al Jaber
+(3.8%)
+(96.2%)
+104,000.00
+9,000.00
+The following table shows the remuneration individually
+granted and owed to each of the Supervisory Board members
+in fiscal year 2021. This is based on the same understanding
+of the term "granted and owed" as set out on page 4 of this
+remuneration report. The remuneration reported in the table
+therefore reflects the amounts actually received in fiscal year
+2021.
+(30.7%)
+100,000.00
+Volkswagen AG employees
+Employees
++74.8%
+-36.2%
+Net income or loss for the year of Volkswagen AG
+Earnings after tax of the Volkswagen Group
+Earnings performance
++9.1%
+Werner Weresch
+-4.1%
+Stephan Weil
+-35.8%
+Athanasios Stimoniaris (until August 31, 2021)
+-3.0%
+Conny Schönhardt
+Jens Rothe (since October 22, 2021)
++8.9%
+Wolfgang Porsche
++3.1%
+Ferdinand Oliver Porsche
++13.5%
+Hans Michel Piëch
+-68.3%
+Bernd Osterloh (until April 30, 2021)
++7.8%
+Bertina Murkovic
++9.2%
+1 Under the transitional provision of section 26j(2) sentence 2 of the Einführungsgesetz
+zum Aktiengesetz (EGAktG - Introductory Act to the German Stock Corporation Act), the
+comparative presentation is to be based on the average remuneration in the period
+since fiscal year 2020 only, rather than the average remuneration for the last five fiscal
+years; this provision applies until the end of fiscal year 2025.
+2 Remuneration "granted and owed" within the meaning of section 162(1) sentence 1 of
+the AktG.
+GROUP MANAGEMENT
+Report on Risks and Opportunities
+Prospects for 2022
+Report on Expected Developments
+214
+184
+176
+EU Taxonomy
+167
+Sustainable Value Enhancement
+136
+Volkswagen AG (condensed, in accordance with the German Commercial Code)
+133
+Results of Operations, Financial Position and Net Assets
++2.1%
+119
+113
+Business Development
+Disclosures Required Under Takeover Law
+Structure and Business Activities
+98
+95
+92
+Internal Management System and Key Performance Indicators
+90
+Goals and Strategies
+86
+REPORT
+Shares and Bonds
+Peter Mosch
+-4.4%
+-2.7%
+1 The remuneration for membership of other Group bodies includes variable remuneration components for the following members of the Supervisory Board: Hans Dieter Pötsch
+(€142,400.00), Marianne Heiß (€71,200.00), Peter Mosch (€142,400.00), Hans Michel Piëch (€106,800.00), Ferdinand Oliver Porsche (€106,800.00), Wolfgang Porsche (€106,800.00)
+and Athanasios Stimoniaris (€40,000.00).
+1,744,846.92
+3,457,500.00
+225,000.00
+1,024,722.21
+94,500.00
+109,000.00
+163,000.00
+199,586.15
+72,666.67
+162,000.00
+21,166.67
+2 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 Deutscher Gewerkschaftsbund (DGB-German Confederation of Trade Unions).
+215,800.00
+163,800.00
+263,000.00
+190,800.00
+166,000.00
+47,552.18
+78,375.00
+216,000.00
+163,900.00
+212,458.33
+(7.4%)
+16,000.00
+(7.5%)
+16,000.00
+(7.4%)
+4,000.00
+(5.1%)
+16,000.00
+(9.6%)
+13,000.00
+(4.9%)
+16,000.00
+(6.0%)
+2,000.00
+(9.4%)
+12,000.00
+(7.4%)
+6,000.00
+(8.3%)
+13,000.00
+(8.0%)
+9,000.00
+(8.3%)
+(91.7%)
+2,207,777.79
+Total
+266,000.00
+Werner Weresch²
+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.
+83
++2.6%
+-2.7%
+-54.3%
+-2.5%
+-2.8%
++1.0%
+-3.0%
++1.5%
+2020¹
+2021 compared with
+Group Management Report
+Louise Kiesling
+4 Mr. Carnero Sojo waived his remuneration for fiscal year 2021 in its entirety.
+Ulrike Jakob
+Kai Bliesener (until March 31, 2021)
+Matías Carnero Sojo (since April 1, 2021)
+Daniela Cavallo (since May 11, 2021)
+Hans-Peter Fischer
+Bernd Althusmann
+Hussain Al Abdulla
+Hessa Sultan Al Jaber
+Jörg Hofmann
+Supervisory Board remuneration²
+Hans Dieter Pötsch
+Annual change in %
+The comparison with the growth in average employee
+remuneration is based on the personnel expenses of Volks-
+wagen AG reported in the notes to the annual financial
+statements of Volkswagen AG, adjusted for the remuneration
+of the members of the Board of Management. These adjusted
+personnel expenses are divided by the number of full time
+equivalent employees of Volkswagen AG as of December 31,
+2021, excluding the members of the Board of Management.
+Earnings performance is shown on the basis of Volks-
+wagen AG's net income or loss for the year. The Volkswagen
+Group's earnings after tax are also used as a Group KPI.
+The following table compares the year-on-year percentage
+change in the remuneration of the Supervisory Board mem-
+bers with the earnings performance of Volkswagen AG and
+with the average remuneration of employees on a full time
+equivalent basis.
+V. Comparative presentation
+Remuneration Report 2021
+84
+Marianne Heiẞ
+•
+2. Remuneration granted and owed
+Volkswagen AG reimburses Supervisory Board members for
+the expenses they incur in the course of their work. In
+accordance with Article 17(7) sentence 2 of the Articles of
+Association of Volkswagen AG, the members of the Super-
+visory Board were also covered in the reporting year by the
+directors and officers (D&O) insurance taken out by the
+Company in their interest. The Company paid the premiums
+for the D&O insurance. There was a deductible of at least 10%
+of the damage up to at least one-and-a-half times the fixed
+remuneration of the relevant Supervisory Board member.
+Remuneration Report 2021
+Corporate Governance
+Goals and Strategies
+Goals and Strategies
+Group Management Report
+With the new Group strategy “NEW AUTO” – Mobility for generations to come, we are
+preparing ourselves for the global changes in mobility and thus driving
+Volkswagen's transformation into a software-centric company.
+In the context of the fast-changing environment and the
+challenges resulting from it, the Group Board of Management
+adopted the new Group strategy “NEW AUTO” – Mobility for
+generations to come in May 2021 with the approval of the
+Supervisory Board. The strategy's focus is the world of mobil-
+ity in 2030.
+NEW AUTO thus continues the transformation initiated
+with the predecessor strategies, TOGETHER 2025 and
+TOGETHER 2025+, which kicked off one of the biggest pro-
+cesses of change in the Company's history with the aim of
+making the Group more focused, efficient, innovative, cus-
+tomer-oriented and sustainable, and systematically gearing it
+toward profitable growth. These strategies have already
+provided the framework and key pillars with which we aim to
+achieve our vision of being a world-leading provider of
+sustainable mobility.
+As technology advances, the automotive industry is
+rapidly forging ahead with the transformation toward e-
+mobility and digitalization. The market for electric vehicles
+will thus continue to grow strongly in the next few years,
+meaning that cost-efficient and sustainable production of
+battery systems and the expansion of charging infrastructure
+will be crucial to success.
+The shift to connected, intelligent and eventually self-
+driving vehicles will, however, bring more wide-reaching
+changes for the automotive industry. Increasing software
+development capabilities seeking to excite customers with
+constantly improving digital functionality is the prerequi-
+sition for this. The most important milestone in this context
+is the development of autonomous driving, which will
+change customers' experience of mobility forever and will
+additionally pave the way for new business models.
+In equal measure to technological trends, the global eco-
+nomic and geopolitical environment is also posing increased
+challenges for the automotive industry. These include, for
+example, the economic influence of our largest mobility
+markets, China, the USA and Europe, and their diverging
+development. We anticipate that the Chinese economy will
+continue to gain influence and grow. The sustained growth in
+economic output (GDP), among other things, underlines the
+importance of the Asian market.
+Sustainability will continue to be a recurring theme in the
+business world, driven by the increasingly noticeable con-
+sequences of climate change and customers' greater aware-
+ness of sustainable lifestyles. We are committed to the Paris
+Agreement on climate protection, which aims to keep the
+increase in global temperature by 2050 to well below 2
+degrees Celsius, and have set ourselves the goal of becoming a
+net carbon-neutral company by 2050.
+With NEW AUTO, we are resetting our priorities and devel-
+oping the necessary expertise as we continue our transition
+from automotive manufacturer to mobility group. Alongside
+software development and capabilities in autonomous
+driving, this also includes areas such as battery technology,
+battery recycling, charging infrastructure and mobility
+services.
+The new Group strategy consists of a total of twelve Group
+initiatives across the brand groups. The focus is on the main
+multidisciplinary topics of mechatronics, software, battery &
+charging, and mobility solutions, on which the five tech
+initiatives described below are based. A further seven base
+initiatives form the foundation for the Volkswagen Group's
+strategic realignment. These are ESG, Decarbonization &
+Integrity, Business Model 2.0, North America (NAR) and China
+Regions, Group Steering Model, People & Transformation and
+Financing the Transformation.
+To make the progress in the relevant Group initiatives of
+our strategy as transparent as possible for management and
+employees, the Group Board of Management decided to
+structure and regularly measure the strategic goals and mile-
+stones using the OKR (Objectives and Key Results) method.
+This means that, for each Group initiative, achievable
+Group Management Report
+THE 12 GROUP INITIATIVES OF THE NEW AUTO STRATEGY
+MECHATRONICS
+SOFTWARE
+BATTERY &
+CHARGING
+MOBILITY
+SOLUTIONS
+VOLUME
+Goals and Strategies
+87
+79
+Pension payments
+ANDREAS RENSCHLER
+2021
+4,354.68
+%
+2021
+RUPERT STADLER
+Total remuneration granted and owed
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)¹
+Severance payments²
+One-year variable remuneration/annual bonus
+Fringe benefits
+Base salary
+Pension payments
+100.0
+PORSCHE
+89.9
+Total remuneration granted and owed
+Severance payments
+8.8
+490,068.28
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+-
+One-year variable remuneration/annual bonus
+1.3
+73,765.00
+Fringe benefits
+Base salary
+%
+5,036,253.00
+5,600,086.28
+PREMIUM
+SPORT & LUXURY
+01 | Backbone and Scalable Systems Platform (SSP)
+BATTERY - CELL AND BATTERY STRATEGY
+We must become a profitable expert along the entire battery
+life cycle to achieve our objective of transforming into a
+world-leading provider of sustainable mobility. To this end,
+the Cell and Battery Strategy tech initiative pools expertise
+across the Group and drives the transformation process
+together with our strategic partners. This includes battery
+management along with cell production and recycling.
+88
+Goals and Strategies
+Group Management Report
+CHARGING - CHARGING AND ENERGY SERVICES
+We need to ensure coordinated and cohesive cooperation
+across the whole Group to establish ourselves as a global,
+comprehensive charging and energy services provider in the
+future. The Charging and Energy Services tech initiative
+combines activities across the brands, creates synergies and
+drives the creation of a dense and extensive charging net-
+work.
+continue growing in the future. This base initiative therefore
+brings together all key measures to continue the success
+story of Volkswagen in China. It includes a comprehensive
+program of measures to expand market share in the electric
+vehicle segment and safeguard market share in combustion
+engine vehicles. The core component remains a Group-wide
+localization strategy, which aims to offer Chinese customers
+tailored products using globally developed platform
+technologies (hardware and software).
+MOBILITY SOLUTIONS
+In keeping with its mission statement, “Mobility for gener-
+ations to come", the Volkswagen Group is developing mobil-
+ity solutions of the future, taking into account global trends
+and changing customer needs. Autonomous driving, com-
+bined with new mobility solutions, is expected to mark
+Volkswagen's transformation into a leading provider of sus-
+tainable mobility.
+ESG, DECARBONIZATION AND INTEGRITY
+ESG (Environmental, Social, Governance) refers to the basic
+principles of doing business sustainably. The Group's stake-
+holders (e.g. investors, employees, customers and non-profit
+organizations) have high expectations of the Company's ESG
+performance, including issues such as decarbonization and
+integrity, but also its conduct as an employer and as part of
+society. The ESG performance therefore directly affects the
+Group's market capitalization, cost of capital and investing
+activities.
+nologies are developed (for instance with the aid of artificial
+intelligence), a completely new experience of mobility and
+additional product differentiation will become possible, due
+in part to the development of automated driving. To maxi-
+mize synergies in the development of software platforms and
+software-based customer functions, the Volkswagen Group
+combines this development expertise with software sub-
+sidiary CARIAD's new software architecture E³ 2.0. The
+CARIAD: One E³ 2.0 Platform and AD Stack tech initiative thus
+comprises measures to drive the development of software
+platforms for connectivity and automated driving and their
+rollout to all Group's vehicles.
+BUSINESS MODEL 2.0
+NORTH AMERICA (NAR) REGION
+North America is the region with the greatest growth
+potential for the Volkswagen Group, especially in e-mobility.
+In the United States, we are putting a wide range of highly
+attractive electric vehicles on the roads, tailored to the
+market. We are positioning ourselves for the future and are
+ready to leverage the growth of an increasingly electrified
+market using our strong brands, products and services.
+GROUP STEERING MODEL
+To achieve the objectives of the Group strategy and, con-
+sequently, long-term success for the Volkswagen Group, we
+need to establish mechanisms for making swift decisions and
+exploiting synergies at a consistently high level, and to con-
+stantly enhance them. The updated Group steering model
+hones the definition of responsibilities and roles and pro-
+vides transparency, thus strengthening collaboration within
+the Group. The Volkswagen Group is creating a future-
+oriented governance model to match the changing environ-
+ment.
+PEOPLE & TRANSFORMATION
+As it becomes a global tech company, the Volkswagen Group
+will see the biggest transformation of its workforce in its
+corporate history. To ensure the Group remains competitive
+in future, we need to attract and retain top talent in the long
+term and support employees by providing extensive training.
+Aligning the structure of the workforce with the fields that
+will be relevant for the future will also be centrally important.
+FINANCING THE TRANSFORMATION
+The transformation being driven by digitalization and
+electrification will require extensive investment. To meet the
+need for financing, this base initiative aims to leverage even
+more Group-wide synergies across all functional areas along
+the value chain, focusing on costs and efficiency. The
+initiative therefore includes multiple action areas, such as
+productivity increases at plants and measures to optimize
+cash flows in the Group.
+GOALS AND KEY PERFORMANCE INDICATORS OF THE
+GROUP'S STRATEGY
+The twelve newly defined Group initiatives describe how we
+intend to achieve our goals of sustainable mobility not only
+for today's, but also for tomorrow's generations. Our strategy
+will continue to be guided by four overarching target dimen-
+sions: excited customers, excellent employer, role model for
+REGION CHINA
+By connecting vehicles, we will be able in future to remain in
+contact with customers throughout the entire vehicle life-
+cycle and thus to offer them services and functions for their
+individual needs. The Business Model 2.0 base initiative is
+developing a Group-wide portfolio of services that aims to
+create a seamless and innovative product experience to
+connect brands, customers, dealerships, our partners and
+whole markets.
+0.9
+Software-based customer functions (such as driver assistance
+systems) have already improved driving comfort and vehicle
+safety significantly in the past. As vehicles become fully
+connected in future and increasingly complex software tech-
+SOFTWARE - CARIAD: ONE E³ 2.0 PLATFORM AND
+02
+| CARIAD: One E³ 2.0 Platform and Autonomous Driving Stack
+03
+Cell and Battery Strategy
+05 | Mobility Solutions
+06 ESG, Decarbonization and Integrity
+04 Charging and Energy Services
+07
+Business
+Model 2.0
+08
+Region
+NAR
+09
+AUTONOMOUS DRIVING (AD) STACK
+Region
+China
+Group Steering
+Model
+11
+People &
+Transformation
+12 Financing the Transformation
+Fixed Costs
+Optimization
+Plant Program
+Purchasing
+Program
+Pricing & Other Sales
+Costs Optimization
+Working Capital
+Management
+strategic objectives will be defined along with envisaged key
+results, and their achievement discussed quarterly with the
+Board of Management.
+MECHATRONICS BACKBONE AND SCALABLE SYSTEMS PLATFORM
+Innovation, technology and lasting competitiveness are to be
+ensured using a future-oriented mechatronics platform. A
+standard platform known as the SSP - Scalable Systems Platf-
+orm will enable maximum synergy effects, reduced invest-
+ment costs and fast, regular technology updates, while also
+ensuring the necessary product differentiation in the Group's
+portfolio. The Backbone and SSP tech initiative forms the
+basis for autonomous driving and supports us in being able
+to offer electric cars for all.
+10
+IV. Remuneration to Supervisory Board members in fiscal year 2021
+1. Supervisory Board members in fiscal year 2021
+The members of the Volkswagen AG Supervisory Board in
+office during the 2021 fiscal year are listed in the table below.
+468,508.74
+99.1
+Christine Hohmann-Dennhardt
+Michael Macht
+Matthias Müller
+Horst Neumann
+Leif Östling
++0.2%
+-73.7%
+-0.2%
+-1.5%
++1.0%
++0.1%
+-71.4%
++0.6%
++2.7%
+-50.7%
+Jochem Heizmann
+-43.8%
+Francisco Javier Garcia Sanz
+-83.0%
+Karlheinz Blessing
+-34.5%
++6.6%
+Hiltrud Dorothea Werner
+Frank Witter³
+Thomas Schmall-von Westerholt
++128.3%
+-56.6%
++74.8%
++40.1%
+2021 compared with
+2020¹
+Hans Dieter Pötsch
+Andreas Renschler
+Rupert Stadler
+Martin Winterkorn
+Earnings performance
+Net income or loss for the year of Volkswagen AG
+Earnings after tax of the Volkswagen Group
+Operating result of the Volkswagen Group
+Operating return on sales of the Volkswagen Group
+Employees
+III. Other remuneration
+Once they have retired from the Supervisory Board,
+former members no longer receive remuneration from Volks-
+wagen AG for their previous work on the Supervisory Board.
+The remuneration enables suitable, qualified candidates
+to be recruited to the Supervisory Board. As such, the
+remuneration of the members of the Supervisory Board
+contributes to the ability of the Supervisory Board as a whole
+to properly and competently perform its duties of moni-
+toring and advising the Board of Management. Restricting
+the payment to fixed remuneration is also appropriate to the
+duties of the Supervisory Board. The restriction provides the
+Supervisory Board members with an incentive in their
+monitoring and advisory duties to properly scrutinize the
+activities of the Board of Management without being guided
+primarily by the performance of key operating ratios.
+The remuneration and attendance fees are each payable
+after the end of the fiscal year.
+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 take place on the
+same day, the attendance fee is paid only once.
+belonged to the Supervisory Board or one of its committees
+for only part of the fiscal year receive remuneration on a pro
+rata temporis basis. Any value-added tax incurred on the
+remuneration is reimbursed by the Company.
+For their work in the Supervisory Board committees, the
+members of the Supervisory Board also receive additional
+fixed remuneration of €50,000 per committee and fiscal year
+provided the committee met at least once that year for the
+performance of its duties. Memberships of the Nomination
+and Mediation Committees established in accordance with
+section 27(3) of the Mitbestimmungsgesetz (MitbestG Ger-
+man Codetermination Act) are not taken into account.
+Committee chairs receive double this amount, while the
+deputy chairs receive one-and-a-half times the committee
+remuneration listed previously. Remuneration is paid for
+work on a maximum of two committees, whereby the two
+most highly remunerated functions are taken into account if
+this maximum is exceeded. Supervisory Board members who
+The members of the Supervisory Board of VolkswagenAG
+receive fixed remuneration of €100,000 per fiscal year. The
+Chair of the Supervisory Board receives fixed remuneration
+of €300,000; the Deputy Chair receives fixed remuneration of
+€200,000.
+II. Overview of remuneration
+The remuneration of the members of the Supervisory
+Board of Volkswagen AG is comprised entirely of non-perfor-
+mance-related remuneration components. Remuneration for
+supervisory board work at subsidiaries continues to be com-
+prised partly of non-performance-related and partly of
+performance-related components.
+Following its regular review of Supervisory Board remuner-
+ation, the Supervisory Board proposed a revision of the
+remuneration for the members of the Supervisory Board to
+the 2017 Annual General Meeting. The proposed revision to
+the Supervisory Board remuneration system was approved by
+the Annual General Meeting on May 10, 2017 with 99.98% of
+the votes cast. The remuneration of the members of the
+Supervisory Board is governed by Article 17 of the Articles of
+Association of Volkswagen Aktiengesellschaft. Section 113(3)
+of the AktG, as amended by ARUG II, requires the Annual
+General Meeting of listed companies to pass a resolution on
+the remuneration of Supervisory Board members at least
+every four years, whereby a resolution confirming the
+existing remuneration is also permissible. Information on
+the system in place for the remuneration of the Supervisory
+Board members must also be provided in this process. At the
+Annual General Meeting on July 22, 2021, the Supervisory
+Board and Board of Management presented the existing
+remuneration of the members of the Supervisory Board for
+confirmation and the remuneration system for approval. The
+Annual General Meeting on July 22, 2021 confirmed the
+remuneration and approved the remuneration system with
+99.99% of the votes cast.
+I. Principles of Supervisory Board remuneration
+Arno Antlitz
+Oliver Blume
+Markus Duesmann
+Gunnar Kilian
+BOARD
+Corporate Governance
+Remuneration Report 2021
+82
+3 Remuneration "granted and owed" for full fiscal year 2021 as an active Board of
+Management member and after his departure from the Board of Management.
+2 Remuneration "granted and owed" within the meaning of section 162(1) sentence 1 of
+the AktG.
+1 Under the transitional provision of section 26j(2) sentence 2 of the Einführungsgesetz
+zum Aktiengesetz (EGAktG - Introductory Act to the German Stock Corporation Act), the
+comparative presentation is to be based on the average remuneration in the period
+since fiscal year 2020 only, rather than the average remuneration for the last five fiscal
+years; this provision applies until the end of fiscal year 2025.
++9.2%
+Volkswagen AG employees
++79.1%
++99.2%
++74.8%
+-36.2%
+B. REMUNERATION OF THE MEMBERS OF THE SUPERVISORY
+Murat Aksel
+Board of Management remuneration²
+Herbert Diess
+Annual change in %
+%
+2021
+FRANK WITTER¹
+2 In the context of the diesel liability settlement, which was approved by the Annual General Meeting on July 22, 2021, Mr. Winterkorn has waived €2.655 million gross of his LTI for fiscal
+year 2016, which was deferred to June 30, 2021 on the basis of a contractual agreement, as his personal contribution.
+1 In the context of the diesel liability settlement, which was approved by the Annual General Meeting on July 22, 2021, Mr. Winterkorn has waived €1.335 million gross of his special
+benefits for fiscal year 2016, which were deferred to June 30, 2021 on the basis of a contractual agreement, as his personal contribution.
+100.0
+1,209,372.00
+2.4
+28,572.00
+97.6
+%
+1,180,800.00
+Pension payments
+2021
+Corporate Governance
+Total remuneration granted and owed
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)¹
+Severance payments²
+One-year variable remuneration/annual bonus
+Fringe benefits
+Base salary
+Pension payments
+Remuneration Report 2021
+80
+2 In the context of the diesel liability settlement, which was approved by the Annual General Meeting on July 22, 2021, Mr. Stadler has waived his conditional claim to a severance
+payment of €5,112,500 gross from Volkswagen AG and AUDI AG. Moreover, Mr. Stadler has waived possible additional claims to severance payments from AUDI AG. In the context of
+the liability settlement, €3.6 million of the waived severance payment from Volkswagen AG and AUDI AG and €80,000 of the waived additional severance claims against AUDI AG were
+considered as Mr. Stadler's personal contribution.
+1 In the context of the diesel liability settlement, which was approved by the Annual General Meeting on July 22, 2021, Mr. Stadler has waived a further €420,000 gross of his LTI for fiscal
+year 2018 as his personal contribution.
+100.0
+MARTIN WINTERKORN
+472,863.42
+Base salary
+13.7
+The Supervisory Board regularly reviews and, if necessary,
+adjusts the level of the remuneration, the total remuneration
+cap and the individual targets. Among other things, the
+Supervisory Board performs a vertical comparison with the
+remuneration and employment terms of the Company's
+employees and a horizontal comparison with the remuner-
+ation and employment terms of other companies' manage-
+ment board members. The Supervisory Board conducts a
+peer group comparison to assess whether the specific total
+remuneration paid to the members of the Board of Man-
+agement is customary when measured against that paid in
+other companies. This peer group is regularly reviewed and
+adjusted, most recently in February and December 2020. The
+peer group currently comprises the following companies:
+BMW, Daimler, Ford, General Motors, Stellantis, Nissan Motor
+Corporation, Toyota, BYD, Tesla (excluding CEO), hp, IBM,
+Uber, SAP, Samsung, General Electric, Siemens, Hitachi and
+Boeing.
+VI. Peer group
+The comparison with the growth in average employee
+remuneration is based on the personnel expenses of Volks-
+wagen AG reported in the notes to the annual financial
+statements of Volkswagen AG, adjusted for the remuneration
+of the members of the Board of Management. These adjusted
+personnel expenses are divided by the number of full time
+equivalent employees of Volkswagen AG as of December 31,
+2021, excluding the members of the Board of Management.
+Earnings performance is shown on the basis of Volks-
+wagen AG's net income or loss for the year. However, the
+remuneration of the Board of Management members is
+based on Group KPIs. In order to demonstrate more trans-
+parently how the remuneration of the Board of Management
+members has changed compared with earnings performance,
+the earnings after tax, operating result and operating return
+on sales of the Volkswagen Group, as reported in the con-
+solidated financial statements, are also used in determining
+earnings performance. This means that Group KPIs are not
+only applied in calculating the remuneration of the Board of
+Management members but also in determining earnings
+performance. The Group KPIs used in determining earnings
+performance show the overall effect of the business activities
+for which the Board of Management is responsible.
+The following table shows a comparison of the year-on-year
+percentage change in the remuneration of current and
+former Board of Management members with the earnings
+performance of Volkswagen AG and with the average
+remuneration of employees on a full time equivalent basis.
+For members of the Board of Management, the remuneration
+granted and owed in in the reporting year, is placed in
+relation to the equivalent figure for the previous year.
+V. Comparative presentation
+81
+Remuneration Report 2021
+Corporate Governance
+1 Mr. Witter was an active Board of Management member until March 31, 2021. The table shows his remuneration in fiscal year 2021 after his departure from the Board of
+Management.
+100.0
+1,580,352.33
+271,099.00
+1,851,451.33
+216,385.92
+Total remuneration incl. pension expenses
+Total remuneration granted and owed
+23.3
+367,551.21
+Multiyear variable remuneration/long-term incentive (LTI, performance share plan 2018-2020)
+Severance payments
+37.1
+586,845.00
+One-year variable remuneration/annual bonus
+3.5
+54,570.20
+Fringe benefits
+22.5
+355,000.00
+Pension expenses
+FIXED