Volkswagen : H1 Report 2022

JANUARY - JUNE 2022

HALF-YEARLY FINANCIAL REPORT

1	UPDATED INFORMATION	7	INTERIM MANAGEMENT	29 BRANDS AND	33 INTERIM CONSOLIDATED FINANCIAL
			REPORT	BUSINESS FIELDS		STATEMENTS (CONDENSED)
1	Key Facts	7	Volkswagen Shares		33	Income Statement
2	Key Events	8	Business Development		34	Statement of Comprehensive Income
		19 Results of Operations, Finan-		37	Balance Sheet
			cial Position and Net Assets		38	Statement of Changes in Equity
		27	Outlook		40	Cash Flow Statement
					41	Notes to the Interim Consolidated
						Financial Statements
					62	Responsibility Statement
					63	Review Report

Key Figures

VOLKSWAGE N GROU P

		Q2					H1
		2022			2021		%		2022			2021		%
Volume Data1 in thousands
Deliveries to customers (units)	1,977		2,547	-22.4	3,875		4,979	-22.2
Vehicle sales (units)		2,011		2,326	-13.5	4,006		4,660	-14.0
Production (units)		2,116		2,194	-3.5	4,160		4,512	-7.8
Employees (on June 30, 2022/Dec. 31, 2021)									668.0		672.8	-0.7
Financial Data (IFRSs), € million
Sales revenue	69,543		67,293	+3.3	132,285			129,669		+2.0
Operating result before special items		4,735		6,546	-27.7	13,188		11,358	+16.1
Operating return on sales before special items (%)		6.8		9.7			10.0		8.8
Special items		-230			-	x	-360	-	x
Operating result		4,505		6,546	-31.2	12,828		11,358	+12.9
Operating return on sales (%)		6.5		9.7			9.7		8.8
Earnings before tax		5,140		6,690	-23.2	14,034		11,153	+25.8
Return on sales before tax (%)		7.4		9.9			10.6		8.6
Earnings after tax		3,914		5,040	-22.3	10,638		8,454	+25.8
Automotive Division2
Total research and development costs		4,930		3,774	+30.6	9,289		7,735	+20.1
R&D ratio (%)		8.5		6.8			8.5		7.2
Cash flows from operating activities		7,803		10,197	-23.5	13,604		19,088	-28.7
Cash flows from investing activities attributable to
operating activities3		7,002		4,711	+48.6	11,311		8,897	+27.1
of which: capex		2,385		1,853	+28.7	4,089		3,777	+8.3
capex/sales revenue (%)		4.1		3.3			3.7		3.5
Net cash flow		801		5,486	-85.4	2,293		10,191	-77.5
Net liquidity at June 30									28,209		35,048	-19.5

1. Volume data including the unconsolidated Chinese joint ventures. These companies are accounted for using the equity method. Prior-year deliveries have been updated to reflect subsequent statistical trends.
2. Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.
3. Excluding acquisition and disposal of equity investments: Q2 €4,846 (3,553) million, H1 €8,694 (7,359) million.

This version of the Interim 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.

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.

Updated Information

Key Facts

1

Key Facts

• Deliveries to Volkswagen Group customers fall across all regions by 22.2% to
  3.9 (5.0) million vehicles; limited vehicle availability caused by the Covid-19 pandemic and parts supply shortages
• Deliveries of all-electric vehicles to customers up 27.0%; their share of Group's total deliveries rises to 5.6 (3.4)%
• Group sales revenue of €132.3 billion up 2.0% on the previous year; includes Navistar with €4.7 billion (consolidated as of July 2021), financial services business sees continued success
• Operating result before special items up by €1.8 billion to €13.2 billion; improvements in the mix and price positioning
• Operating result up by €1.5 billion to €12.8 billion; negative special items of €-0.4 billion in the reporting period relating to the diesel issue
• Profit before tax climbs to €14.0 (11.2) billion; profit after tax at €10.6 (8.5) billion
• Automotive Division's net cash flow amounts to €2.3 (10.2) billion; acquisition of Europcar shares amounting to approximately €1.7 billion; capex ratio at 3.7 (3.5)%
• Net liquidity of €28.2 billion in the Automotive Division; successful placement of hybrid notes strengthens capital base; dividend payment of €3.8 billion in May
• Exciting products:
  - Volkswagen adds four-wheel drive version ID.4 Pro 4MOTION to the ID.4 portfolio;
  ID. AERO concept vehicle offers a look at an all-electricmid-sized saloon - ŠKODA presents reworked Karoq with a new design language
  - CUPRA outlines its vision and ambitions for the period to 2025 with the Terramar,
  Tavascan and UrbanRebel vehicles
  - Audi illustrates the premium mobility of tomorrow with the spacious concept car
  Audi urbansphere
  - Lamborghini presents the Huracán Tecnica super sports car
  - Bentley expands the Bentayga model range with the luxurious Grand Tourer
  Bentayga Extended Wheelbase
  - Scania presents battery-electric trucks for regional transport - MAN announces eBus chassis for the global market

2

Key Events

Updated Information

Key Events

COV I D - 1 9 PA N DE M IC

The global spread of the Omicron variant of coronavirus (SARS-CoV-2) had a substantial impact on social and economic life in the reporting period in some regions. In China in particular, local infection outbreaks during the first half of 2022 led to tight restrictions under the zero-Covid strategy being pursued there, resulting in economic damage and disruption to international supply chains.

RU S SIA - U KRA I N E CON F LI CT

In the first six months of 2022, the Russia-Ukraine conflict led to a humanitarian crisis and global market upheaval. Prices rose substantially, particularly on energy and commodity markets. Parts supply shortages, especially for wire harnesses, also intensified in this context. The Russia-Ukraine conflict led to increased uncertainty in respect of developments in the global economy and prompted large sections of the community of Western states to impose sanctions on Russia ranging from an extensive trade embargo to the exclusion of Russia from the global financial system.

N EW PRO DU CT S AN D TE CH NO LOG I ES P RE SEN TE D

The Volkswagen Group and its brands continued to present new vehicles and technologies in the second quarter of 2022.

The Volkswagen Passenger Cars brand added another four- wheel drive version to the all-electric ID.4 product portfolio: the ID.4 Pro 4MOTION. Based on the ID.4 Pro Performance, this model generates a system output of 195 kW (265 PS) and offers greater dynamics and better traction in wet and snowy conditions and on loose surfaces. Thanks to a second electric motor on the front axle, the new more powerful variant transmits its power to the road through all four wheels. This makes the ID.4 Pro 4MOTION a high-performance vehicle and a reliable partner when towing smaller transport or boat trailers. As a result of the all-wheel drive, the (braked) towing capacity increases by 200 kg compared with the classic Pro Performance version to 1,400 kg on up to 8% gradient. Celebrating the world premiere of the ID. AERO concept vehicle in China, Volkswagen Passenger Cars gave a foretaste of its first all-electricmid-sized sedan. Its progressive, stylish and aerodynamic design boasts an elegantly sloping coupé-style roof line. The interior is generously proportioned. Based on the Group's Modular Electric Drive Toolkit (MEB), the ID. AERO shows off the flexibility of the all-electric MEB architecture,

which can be used across segments in vehicles ranging from compact crossovers through SUVs or minibuses down to spacious sedans. As a result of the interaction of a powerful 77 kWh lithium-ion battery, efficient drivetrain and excellent aerodynamic properties, the ID. AERO has a range of up to 620 km. The series version for China is expected to be launched in the second half of 2023. Volkswagen is planning to start producing a European variant at the Emden plant, also in 2023.

ŠKODA presented the reworked Karoq in the second quarter of 2022. The consistently enhanced ŠKODA design language has given the compact SUV more striking looks and improved aerodynamics, with reduced fuel consumption and emissions. Sustainable materials and modern technologies provide higher comfort levels in the interior. For the first time, matrix LED headlights are available for the Karoq. The range of engines comprises five efficient engines from the Volkswagen Group's current EVO generation; this means that the Kodiaq's smaller brother benefits from lower fuel consumption and CO2 emissions. At Power2Drive in Munich, the trade fair for charging infrastructure, mobility services and e-mobility, ŠKODA also celebrated the launch in Germany of its sporty top-of-the range model, the Enyaq Coupé RS iV. It marks the expansion of ŠKODA's RS family with the addition of an all-electric model. Two electric motors generate a combined system output of 220 kW (299 PS), enabling the Enyaq Coupé RS iV to sprint from 0 to 100 km/h in 6.5 seconds. Its top speed is 180 km/h. The sports chassis also contributes to the dynamic driving experience: the coupé has been lowered by 15 mm at the front and by 10 mm at the back.

In June 2022, CUPRA presented its vision and ambitions for the period to 2025, providing a look ahead to three new electrified models: the CUPRA Terramar combines vigorous proportions and striking design to create an emotive, sporty SUV with which the company plans to gain access to further regions of the SUV segment. The CUPRA Terramar will be available both with different combustion engines and with a new generation of plug-in hybrid drives. It is expected to have an electric range of around 100 km. The CUPRA Tavascan embodies CUPRA's electric vision and is intended to remain true to the 2019 concept vehicle. The dynamic SUV coupé, which is to be launched in 2024, represents not only the vision of contemporary electrification, but is also aimed at making the CUPRA brand more global and at tapping into new markets. With the UrbanRebel, CUPRA wants to challenge

Updated Information

Key Events

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conventions and stir emotions. The front-wheel-drive urban electric car is expected to use the Volkswagen Group's MEB platform as a basis for a vehicle that excites customers with inspiring performance.

With its three concept cars, Audi skysphere, Audi grand- sphere and Audi urbansphere, the brand with the four rings illustrates its vision of premium mobility in the future, with access to a world of experience that far transcends the perfunctory stay on board as a routine way of getting from A to B. The latest model of this trio to be presented by Audi was the urbansphere concept, in the second quarter of 2022; it features a spacious and revolutionary interior where digital technologies provide a sphere of experience for megacity traffic. In terms of technology, the Audi urbansphere is based on the Premium Platform Electric (PPE). The key element of PPE is a battery module between the axles, which - similar to the Audi grandsphere launched before it - provides around 120 kW/h of energy. The 800-volt charging technology enables charging of the battery at up to 270 kW within a short time: it takes just ten minutes at a fast-charging station to load enough energy for a drive of over 300 km; the charge level can be upped from 5% to 80% in less than 25 minutes. The two electric motors of the Audi urbansphere concept, one each on the front and rear axle, generate an aggregate output of 295 kW (401 PS). The fact that the front axle drive can be disengaged as needed to reduce friction, thus cutting energy consumption in roll mode, is a first.

In April 2022, Lamborghini presented the latest member of the Huracán model range, the Huracán Tecnica. This latest stage in the evolution of the Huracán boasts improved aero- dynamics, output, stability and user-friendliness - qualities that make it an allrounder on the road and the racing track. The engine of the Huracán Tecnica originates from the Huracán STO; it generates an output of 471 kW (640 PS), 22 kW (30 PS) more than the Huracán EV0 RWD. The super sports car masters the sprint from 0 to 100 km/h in 3.2 sec- onds.

The Bentayga Extended Wheelbase, which was unveiled by Bentley in the second quarter of 2022, is a luxury SUV that defines a completely new vehicle class. In the Grand Tourer, which has been made 180 mm longer than the Bentayga, the focus is on well-being: the interior boasts seats styled like those in an aircraft, featuring automatic climate sensors and a progressive system to optimize posture. Carefully crafted elements additionally enhance the first-class interior. The lighting of the Bentley Diamond is designed in such a way that light shines through the handmade leather lining of the interior. Particularly fine thread has been used to produce the remarkably soft diamond quilting. The driving dynamics of the Bentayga Extended Wheelbase are determined by a 4.0 l V8 engine with 405 kW (550 PS), the new rear-axle steering and the Bentley Dynamic Ride system, which comes as standard.

Scania wants to offer new electric vehicles to its customers every year in future. Following the vehicles for intra- city goods transport, Scania has now unveiled battery-electric

trucks for regional transport. The new model range comes with a battery capacity of 624 kWh and is available with R or S cabs. It is based on classic Scania cornerstones such as modularity and sustainability, offering companies a multitude of different uses in regional transport applications. In their respective areas of deployment, the vehicles match the output and range of conventional trucks, but exceed their performance in terms of economy and CO2 efficiency. In the migration from conventional to electric trucks, Scania supports its customers in all areas of e-mobility: from the charging infrastructure through service and maintenance down to suitable financing models and insurance options.

MAN presented an eBus chassis for the global market in the second quarter of 2022; it is based on the proven technology of the all-electric Lion's City E, which is already being used successfully in many European countries. The aim is to continue to advance environmentally friendly mobility and to make city traffic cleaner, quieter and safer across the globe. The first prototypes are expected to hit the road in 2023, with series production planned for 2024. Together with ABB E-mobility, a global leader in the provision of charging solutions for electric vehicles, MAN is taking the next step toward e-mobility in long-haul truck transportation: for the first time, MAN revealed a close-to-production prototype of its upcoming electric truck on the premises of former Berlin Tempelhof airport in the second quarter. A special technical feature of the groundbreaking e-truck, which is expected to celebrate its market debut in 2024, is its preparation for future megawatt charging technology, which ABB E-mobility intends to have ready for the market within the next three years.

AWA RD S

At the beginning of April 2022, no fewer than four Group brands won first prize in one of the categories of the Top Gear Electric Car Awards. Volkswagen's ID. Buzz was crowned Electric Car of the Year, while the Readers' Choice Award went to the Porsche Taycan Sport Turismo. ŠKODA's Enyaq iV won the Best Value Electric Car award. Audi took home the prize for Best Racer with its RS Q e-tron. The Electric Car Awards are presented in a total of 18 categories by the respected BBC Top Gear magazine.

In mid-April, the Audi e-tron GT was honored as World Performance Car at the World Car Awards 2022. The World Car Awards are handed out annually by a professional international panel in New York to reward excellent leadership and innovation in the automotive industry. Audi has been a winner eleven times, making it the most successful manufacturer in the history of the Award.

Also in April, the Lamborghini brand received the Green Star Award 2022 for the second time in succession; this award is presented annually by the German Institute for Quality and Finance. This process involves looking at 2,000 companies and analyzing ecological, economic, and social sustainability, as well as innovation and technology.