China, the world’s largest bus market, we are forecasting DEVELOPMENT OF THE MARKETS FOR FI NANCIAL SERVICES

China, the world’s largest bus market, we are forecasting DEVELOPMENT OF THE MARKETS FOR FI NANCIAL SERVICES

an upswing. We expect automotive financial services to continue to grow in importance worldwide in 2013 and 2014. We anticipate

DEVELOPMENT OF THE MARKETS FOR POWER ENGI NEERING

that demand for financial services will increase more After recording an overall decline in the market in the Power strongly in those emerging markets in which market pene- Engineering segment in 2012, we are predicting weak tration is currently low, such as China and Russia. In market momentum for 2013 and 2014.

regions with developed automotive finance markets, there The merchant shipbuilding market is still dominated will be a further shift in the offering towards enabling by substantial overcapacity and is not expected to recover mobility at a manageable total cost, with services such as in the next few years despite a further drop in ship deliv- insurance, innovative packages of services and new mobility eries. The excess capacity is generating considerable price

offerings like car sharing becoming increasingly important.

EXCHANGE RATE TRENDS

On the Chinese market, we will continue revamping our In fiscal year 2012, the global economy was dominated by range of compact saloons in 2013 by rolling out the new uncertainty, which also significantly affected market partici- Jetta. pants’ expectations. This in turn substantially impacted

The Audi brand will systematically continue its product exchange rates, leading to substantial volatility. The euro drive in the premium segment, offering the A3 saloon for gained against the US dollar in the first two months of the first time in addition to the new A3 Sportback. These 2012 before weakening again up to mid-year. It then models are specifically geared towards premium customers trended upwards again in the second half of the year. For in emerging markets who prefer saloons. Audi will also 2013 and 2014, we expect euro exchange rates against the introduce a large number of other exciting, sporty versions US dollar, sterling, Chinese renminbi and other key cur- in nearly all size classes. The flagship Audi A8 and the Audi rencies to be stable, despite continuing high volatility in R8 products will be significantly enhanced. the financial markets. Event risk – defined as the risk arising

ŠKODA plans to roll out the new versions of the Octavia from unforeseen market developments – has increased, and Octavia estate, which are based on the Modular however.

Transverse Toolkit ( MQB ), in 2013. The Rapid series will be expanded by adding a sporty, compact hatchback model.

The SEAT brand will unveil the sporty three-door version Interest rates remained extremely low in fiscal 2012 due to of the new Leon and enter the stationwagon segment with the ongoing expansionary monetary policy and the difficult the Leon ST. overall economic environment. Several countries actually

I NTEREST RATE TRENDS

The Group’s new brand, Porsche, will also expand its lowered their interest rates further in the course of the year. product range in 2013, revamping the 911, Cayman, In 2013, we consider it unlikely that either Europe or the Cayenne and Panamera series. The Group will additionally USA will adopt a more restrictive monetary policy, and hence launch the Panamera S and the 918 Spyder, the first vehicles increase interest rates. We are predicting that short- and with plug-in hybrid technology. long-term interest rates will only rise in 2014 if inflation

Bentley will upgrade its model range in 2013 as well. increases.

Following the introduction of the Continental GT Speed Convertible, the new Bentley Flying Spur will be launched

DEVELOPMENT OF COMMODITY PRICES

mid-year.

Commodity prices were highly volatile in 2012. After peaks Lamborghini will bring out a roadster version of the were recorded in the first and third quarters, prices tailed Aventador in 2013 to match the existing coupé. off as the year drew to a close. The main reasons for this

MAN will deliver the new TG family with its Euro 6 were the downward revisions in growth estimates for engines, which was already showcased at the IAA Com- Europe and the US economy in particular, and their impact mercial Vehicles 2012, to customers for the first time in on global development. Assuming that the global economy 2013. continues to grow, we expect prices of most exchange-traded

It is also planning to roll out a new six-cylinder gas engine raw materials to remain high, but to fluctuate considerably, at the end of 2013. Powered by natural or special gas, this in 2013 and 2014. Prices for raw materials may also fall if can be deployed in all areas in which CHP is used, for growth rates decline.

example in swimming pools, hospitals, and biogas and sewage treatment plants.

N EW MODELS I N 2013

As in previous years, we will continue to expand the The Volkswagen Group will continue its model initiative in Volkswagen Group’s model range where appropriate in 2013 and judiciously modernize and expand its offering by 2014, further strengthening our market position. We will introducing attractive new vehicles. Priority will always be successively expand our portfolio of vehicles equipped with given to what customers want.

electric drives.

The Volkswagen Passenger Cars brand will continue to

renew its Golf product family in 2013. In addition to the PLAN NED PRODUCT MEASU RES

Golf estate and the exciting top-of-the-line models, the GTI The Volkswagen Group’s goal is to offer consistently and GTD , we will be presenting the new, particularly fuel- efficient and carbon-optimized mobility, including options efficient Golf BlueMotion. The up! family will be enlarged based on alternative drive technologies, so as to live up to by adding the cross up! and the e-up!, the first vehicle its responsibilities with respect to sustainability. Given the developed by the Volkswagen Group to run on electrical increasingly strict exhaust and emission standards and the power alone.

fact that vehicle taxation is CO 2 -dependent, vehicle CO 2

MANAGEMENT REPORT 241 Business Development Shares and Bonds Results of Operations, Financial Position and Net Assets Volkswagen AG (HGB) Value-Enhancing Factors Risk Report Report on Expected Developments

emissions are playing a more and more important role in We will further expand our multibrand structure in the vehicle purchases. Volkswagen is therefore continuing to growth markets in particular so as to facilitate market focus in depth on developing efficient drive technologies, entry for other Group brands. We will also increase our thus extending its position as an innovation leader in the customer focus across all sales levels and in customer area of environmentally friendly mobility.

service by continually enhancing employee qualifications We shall continue to drive forward the issues of down- on the one hand, and by optimizing processes and systems sizing and zero emissions in our products in the coming in view of changing customer demands and markets on the years. Downsizing increases material and energy efficiency other. The aim of our sales strategy remains the same – the by reducing drivetrain sizes while retaining their original integrated marketing of vehicles, financial and other services, performance. Volkswagen is expanding its e-mobility as well as genuine parts and accessories. operations – in the form of both plug-in hybrids and purely

electric drives – thanks to its in-depth research. Its current MARKET OPPORTU NITIES

and future projects are improving the Volkswagen Group’s The Volkswagen Group sees the greatest growth potential environmental footprint on an ongoing basis.

– above and beyond the established markets in China and The Group’s many different concepts are proof of the Brazil – in India, Russia and the USA, as well as in the ASEAN individual brands’ high level of development and diversi- and Middle East regions. We are also examining the market fication expertise. At the beginning of 2012, the Group opportunities in particularly price-sensitive segments, which became the first manufacturer to implement fuel-saving in terms of volume are particularly relevant in China and technology in series production of a charged four-cylinder India, but also in other markets around the world. engine with its cylinder management concept for the 1.4 TSI .