Volkswagen Group Investor Presentation Volkswagen AG

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					Volkswagen Group Investor Presentation
- Financial Services Division -


London, 9 May, 2008
Volkswagen Financial Services AG is responsible for coordinating
the worldwide financial services activities of the Volkswagen Group


                        VOLKSWAGEN GROUP

         Automotive Division           Financial Services Division



                                     Volkswagen Financial Services AG
                                          Europe / Asia-Pacific /
                                              South America


    Volkswagen Commercial Vehicles          Financial Services
                                              USA / Canada
         Remaining companies

                                                                        2
Volkswagen Financial Services AG is affiliated with companies in
37 countries through shareholdings and service agreements




                                                                   3
Mission Statement




    The mission of VW Financial Services is to promote the sales of
    VW Group cars and to achieve an adequate return by satisfying
    customer’s mobility needs with car-related services which
    establish standards of excellence in automobile financing,
    leasing, insurance and linked services.




                                                                      4
Utilization of all potentials in financial services along the
automotive value chain within Volkswagen Group

     Manufacturer                  Dealership             Volkswagen Financial Services




                                                                                                              Fleet Management


                                                                                                                                 Loyalty Products
               R&D, Procurement,




                                                          Dealer Financing


                                                                             Credit / Leasing
                                            After Sales




                                                                                                Insurance /
                                                                                                Warranty
                  Production




                                    Sales




   „The Automotive value chain of Volkswagen Group has been expanded by essential areas
   of „Mobility“: we develop, produce, sell, finance, provide leases, insure, let, repair und
   remarket vehicles. Furthermore, we offer products to our customers, which provide them
   with „financial mobility“ in addition to their „automotive mobility“.
                                                                                                                                                    5
Increased costs for mobility vs. stagnating net income leads to
budget constraints in private households
      january 1995 = 100
190

180                                                                                                        Fuel price

170

160

150                                                                                                  Vehicle
140                                                                                                maintenance

130

120

110
                                                                                              Net income
100

 90
  01/95   01/96   01/97    01/98   01/99   01/00   01/01   01/02   01/03   01/04   01/05   01/06   01/07


  costs for mobility and net income in Germany, 1995 - 2007

                                                                                                                        6
Translating Strategy into Action: Product Packages

• Innovative mobility packages: ‚FairP(l)ay Financing’, ‘All-Inclusive’,
  ‘Made by Volkswagen’, ’Sauber + Sorglos’, ’Fan Package’ ...

• “All-inclusive” mobility packages offer …
    -   an attractive vehicle,
    -   a financing or lease offer including auto insurance,
    -   an extended warranty,
    -   up to four years of comprehensive maintenance and inspection

• Product packages ...
    - met customers needs and guaranteed them comprehensive
      mobility based on calculable monthly costs

    - helped to avoid discussions about price and discounts,
      that have negative effects on the value of pre-owned vehicles.

    - lead to positive effects on volumes and prices
                                                                           7
International roll-out of the package strategy
                                                 Spain




               France




                                                   Sweden




                                                  Italy
  UK             Poland           NL
                                                          8
Translating Strategy into Action: Innovative Insurance offers

• Novel and brand specific insurance offers with simplified tariffs
  relating to model and model features rather than driver demographics
 (eg. relating the choice of safety features to the insurance tariff)


• „EOS-weeks“: Insurance campaign for the Volkswagen EOS
 (no deductible when parking sensor is chosen)


• Insurance tariffs for Volkswagen Fox and Volkswagen Polo
 (reduced insurance rate if electronic stability program is chosen)


• Insurance tariff for the new Audi A4 limousine
 (reduced insurance rate if Adaptive Cruise Control
  and Braking Guard are chosen)


                                                                         9
Impact on the automotive value chain of Volkswagen Group

• Sales promotion utilizing financial services (mobility packages /
                                                                        Loyalty Products
  tailor-made insurance products) …

   - increases vehicle turnover and sales of new and used cars        Fleet Management

   - conserves residual values
                                                                      Insurance / Warranty
   - increases the re-buy rate
   - pushes the usage of original parts                                 Credit / Leasing
   - increases the group dealers body shop utilization
                                                                        Dealer Financing
   - generates a positive return within the group and its partners

                                                                          After Sales
• Financial Services support group dealers

• Increasing brand loyalty towards group brands                              Sales


• Fixed customer base (around 5 million worldwide) is a               R&D, Procurement,
                                                                         Production
  precondition for proactive CRM

                                                                                           10
Volkswagen Financial Services AG – Portfolio Overview

                             6.000



                             5.000                                                              16%
                                                                         8,5%
                                                                                                      2.033
Volume of (Contracts '000)




                             4.000
                                                                                          1.818
                                                       1.585       1.597
                                             1.495
                             3.000   1.453



                                                                                                      2.317
                             2.000
                                                       1.773       1.823                  1.890
                                     1.579   1.698


                             1.000

                                     781     813       830         789                    859         949

                                0
                                     2002    2003      2004        2005                   2006        2007

                                             Leasing   Financing    Insurance & Service



                                                                                                              11
Volkswagen Financial Services AG – Key data (IFRS)


                                       2003     2004     2005     2006     2007


 Portfolio (‘000)                      4,006    4,188    4.209    4.567    5.299


 Retail + Leasing receivables (€ mn)   23.778   25.845   27.366   30.021   34.523

 Wholesale Receivables (€ mn)          4.893    6.815    6.614    6.989    9.360


 Direct-bank deposits (€ mn)           6.744    8.017    8.735    8.827    9.620


 Employees                             5.055    5.253    4.968    5.022    6.138


 IAS Profit before tax (€ mn)           565      567      696      705      809




                                                                                    12
Volkswagen Financial Services AG – Strategic Goals

    Strong focus on safeguarding as well as further developing the core business
    - European roll out of product packages based on positive experience in Germany since 2006
    - Expansion of international fleet management activities
    - Expansion of used car business


    Extension and further development of insurance business
     - Increase integration between financing and insurance business
     - Introduction of new model specific insurance offers using our reinsurance company (USP)


    Further development / exploration of growth markets such as Russia and India


    Optimising of funding, especially for Volkswagen Bank
     - Strengthening of rating differentiation from Volkswagen Group
     - Increasing use of refinancing instruments independent of the corporate rating


    Further improvement of productivity, e.g. by industrialization of (service) processes

                                                                                                 13
No Subprime Involvement

• Volkswagen Financial Services AG holds no Subprime Investments
 and has thus no need for write-offs in that respect

• Our Funding Strategy aims at a well diversified funding mix
 to ensure maximum flexibility and an optimal cost basis

• As an Automotive Captive our business differs decisively from the
 U.S. subprime mortgage business: We have a prime quality portfolio
 and high quality securitized assets due to

     • relatively short duration of finance contracts with fixed rates
     • stable residual values
     • frictionless re-marketing

                                                                         14
Dynamic Loss Ratio well under control

 1.0%



 0.8%



 0.6%



 0.4%



 0.2%



 0.0%
                   2003                         2004                         2005                         2006                         2007


                                   Retail financing                   Leasing                 Corporate financing



 Dynamic Loss Ratio = utilisation of provisions including direct write-offs relative to the average volume of receivables (last four quarters)




                                                                                                                                                 15
Funding sources of Volkswagen Financial Services AG
                                             Others
Over 30% of                                                 Bonds issued
                                              6%
refinancing activities                                          33%
are independent of
company rating                     Equity
(Customer deposits,                 11%
ABS)
                         Liabilities to
                           affiliated
                         companies
                              5%

                            Liabilities to
Almost half of               Financial
refinancing is                                                   Asset-Backed
                            Institutions
                                                                  Securities
sourced from                    10%
                                                                     14%
capital markets
                                              Customer   Commercial
                                              Deposits     Papers
                                                18%          3%
                                                             As per December 2007   16
Disclaimer
This presentation contains forward-looking statements and information on the business
development of the Volkswagen Group. These statements may be spoken or written and can
be recognized by terms such as “expects”, “anticipates”, “intends”, “plans”, “believes”,
“seeks”, “estimates”, “will” or words with similar meaning. These statements are based on
assumptions relating to the development of the economies of individual countries, and in
particular of 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 involve a degree of risk, and the actual developments may differ from those
forecast.

Consequently, any unexpected fall in demand or economic stagnation in our key sales
markets, such as in Western Europe (and especially Germany) or in the USA, Brazil or China,
will have a corresponding impact on the development of our business. The same applies in
the event of a significant shift in current exchange rates relative to the US dollar, sterling,
yen, Brazilian real, Chinese rinminbi and Czech koruna.

If any of these or other risks occur, or if the assumptions underlying any of these statements
prove incorrect, the actual results may significantly differ from those expressed or implied by
such statements.

We do not update forward-looking statements retrospectively. Such statements are valid on
the date of publication and can be superceded.
                                                                                              17

				
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