Business Development Volkswagen Group delivers more than nine million vehicles for the first time

Business Development Volkswagen Group delivers more than nine million vehicles for the first time

The global economic climate deteriorated significantly in fiscal year 2012. This had a clearly negative impact on parts of the automotive industry. In spite of this, the Volkswagen Group further strengthened its market position: for the first time, the number of vehicles delivered to customers passed the nine million mark. This corresponds to an increase of 12.2% compared with the previous year.

GLOBAL ECONOMY LOSES MOMENTUM

ensuing rise in incomes stimulated private consumption During the reporting period, the global economy and stabilized the economy. Nevertheless, the German registered slower growth than in the previous year. economy grew by an average of just 0.9% during the year Industrialized nations achieved only low levels of growth (previous year: 3.1%). as a result of structural obstacles, particularly due to the

overburdened budgets of some countries. Emerging market North America

economies continued to perform better than average, but The US economy recorded growth of 2.2% in 2012 growth rates were still lower. Inflation was moderate compared with 1.8% in the previous year. Unemployment despite the expansionary monetary policies of many central declined only slightly in spite of the continued extremely banks. The global economy expanded by 2.6% in 2012, expansionary monetary policy. The US dollar was volatile down from 3.0% in the previous year.

against the euro during the period, but ended the year at roughly its starting level. Canada’s GDP rose by 2.0%

Europe/Remaining markets

(previous year: 2.6%) and the Mexican economy expanded In Western Europe, GDP declined by an average of 0.2% by 3.8% (previous year: 3.9%). compared with a 1.5% rise in the previous year. A few

northern European countries joined the southern South America

European EU countries in recording negative growth rates. GDP growth declined to 1.0% in Brazil (previous year: The overall unemployment rate in Europe rose to 11.8% 2.7%), and dropped sharply in Argentina to 1.7% (previous (previous year: 10.6%), but the figure in Greece, Ireland, year: 8.9%). Brazil saw a slight decline in inflation, while Portugal and Spain was much higher than this average. Argentina’s inflation rate remained extremely elevated. Average GDP growth in Central and Eastern Europe declined to 2.5% (previous year: 4.8%).

Asia-Pacific

The South African economy grew by 2.5% (previous Asia’s emerging economies continued to register very year: 3.5%), but unemployment remained at a high level.

positive, albeit less dynamic, growth in 2012. At 7.8%, China’s economic growth was slower than in the previous

Germany

year (9.3%), but was still above the central government’s The weaker global economy and ongoing eurozone crisis target rate of 7.5%. The Indian economy expanded by 5.1% meant that Germany’s rate of economic expansion in the (previous year: 6.9%). The Japanese economy expanded year under review also fell short of the prior-year figure. by 2.0% (previous year: –0.5%), as it recovered from the The positive labor market trend continued in 2012 and the

natural disasters in 2011.

EXCHANGE RATE MOVEMENTS FROM DECEMBER 2011 TO DECEMBER 2012 Index based on month- end prices: December 31, 2011 = 100

DEMAN D FOR PASSENGER CARS AN D LIGHT COMMERCIAL

Europe/Remaining markets

VEHICLES REACHES N EW RECORD H IGH

As expected, new passenger car registrations in Western Global passenger car sales rose by 7.2% to 66.6 million Europe declined year-on-year to 11.7 million vehicles vehicles in 2012, exceeding the previous record achieved (–8.2%), the lowest overall market volume recorded since in 2011. All regions contributed to this success, with the 1993. The sharp market declines, particularly in the exception of Western Europe. In particular, double-digit Southern European markets, were mainly attributable to growth rates in the markets of North America and in the the effects of the sovereign debt crisis, the weak state of the Asia-Pacific region bolstered this development. Demand in economy, rising unemployment and the ensuing uncer- South America reached an all-time high. New vehicle sales tainty among market participants. Demand slumped in the also rose in Central and Eastern Europe, but did not reach volume markets of Italy (–19.9%), France (–14.1%) and the levels seen in 2007 and 2008. South Africa continued Spain (–13.4%). By contrast, in the United Kingdom, high the upward trend of the past two years. Global passenger demand from private customers led to market growth of car production rose by 6.0% to 70.5 million units in the 5.3%. At 54.9%, the market share of diesel vehicles reporting period.

(passenger cars) in Western Europe in 2012 nearly reached the previous year’s record high.

Sector-specific environment

The passenger car markets in Central and Eastern The established passenger car markets turned in a mixed Europe continued their recovery in the reporting period, performance in fiscal year 2012. While some industri- with an increase of 5.9% to 3.9 million units. As in the alized countries were negatively affected by the debt crisis previous two years, the main growth driver was the Russian and its repercussions, others – including Germany – profited market, where vehicle sales fell only slightly short of the from the still robust demand in some growth markets in record level seen in 2008, rising 10.9% to 2.7 million the first half of the year.

units. After the government support measures came to an The extensive development of the major markets in end, the main beneficiaries were foreign suppliers with China and Brazil, the expansion of activities in India and Russian production facilities. At 0.7 million passenger cars, the ability to meet demand in Russia are becoming increas- the Central European EU states recorded a lower market ingly important for the automotive industry.

volume (–3.7%). The passenger car markets developed Many Asian and African markets are showing signs of positively in Hungary (+6.7%), the Baltic States (+2.4%), further easing in trade. However, it cannot be ruled out Slovakia (+2.0%) and the Czech Republic (+0.4%). By that these countries will fall back on protectionist measures contrast, new passenger car registrations were down in in the event of another global economic slump.

part significantly year-on-year in Romania (–25.6%), Slovenia (–16.8%), Bulgaria (–4.3%) and Poland (–0.4%).

MANAGEMENT REPORT 155

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

ECONOMIC GROWTH Percentage change in GDP

-2 Global economy -4

USA Western Europe

In Turkey, vehicle sales declined to 549 thousand (–7.4%) in 2007. In Canada, the overall market volume was higher in 2012, largely due to weaker demand in the first half of than in the previous year, up 5.7% to 1.7 million vehicles the year.

in the reporting period. The Mexican market recorded New registrations in the South African market rose 10.4% growth in new registrations to approximately 1.0 11.0% to 443 thousand units in the reporting period. This million units. trend was positively impacted by better financing options.