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Volkswagen Interim Report January-March 2005

- Volkswagen Group operating profit of EUR 464 million (previous year: EUR 329 million) improves year-on-year, despite the difficult market situation

- Automotive Division operating profit of EUR 234 million (previous year: EUR 98 million) increases substantially year-on-year; Financial Services Division operating profit continuing at high level of EUR 230 million (previous year: EUR 231 million)

- January-March 2005 sales revenue 2.4% lower year-on-year at EUR 21.1 billion

- Automotive Division cash flows from operating activities of EUR 708 million (previous year: EUR 1,374 million) reduced by the launch of new models

- At 5.2%, ratio of investments in property, plant and equipment (capex) to sales revenue in the Automotive Division in the first three months of 2005 considerably lower than in 2004 (6.3%)

- At EUR -1,664 million, net liquidity in the Automotive Division slightly up on 2004 year-end (EUR -1,734 million), despite higher inventory levels due to product program and seasonal factors

New model rollout successfully continued in 2005:

– New Passat, Jetta, Polo, Fox (Europe), Bentley Continental Flying Spur, Audi A6 Avant and Audi RS 4 presented at international motor shows

- Good start to sales of Golf GTI, Golf Plus, Phaeton six- cylinder diesel and Audi A6 Avant

- Significant increase in worldwide unit sales of Touran, Fox and Skoda Octavia

- Substantial growth in demand for Caddy, Multivan and Transporter

As expected, the most important automotive markets experienced a relatively difficult start to 2005. Neither are we forecasting any significant change in the macroeconomic environment over the coming months, so we do not expect any improvement in the situation in the high-volume automotive markets in the short term. We believe that price pressure will continue unabated. In addition, the persistently unfavorable exchange rates and uncertainty about developments in the costs of raw materials, especially steel, will put further pressure on the automotive manufacturers.

For the current year, we are expecting an improvement in our sales figures in the USA on the back of the full availability of the Audi A4 and Audi A6, as well as the current model changes for the Jetta and the Passat. We are convinced that following the start-up phase, we will gain additional market share in Western Europe from the launch of the new Passat, the Golf Plus, the new Polo and the Fox. In addition, the start of sales of the successor to the SEAT Leon and of the new Audi RS 4 will follow in the second half of the year. Based on the large number of new models we are launching in 2005, we believe that the Volkswagen Group will deliver a higher volume over the year as a whole than in 2004.

The ForMotion program will continue to be systematically implemented to improve our competitive strength and cost structures; we are confident that we will achieve the target earnings contribution of EUR 3.1 billion for 2005.

2005 operating profit after special items will improve year-on-year – although the extent of this improvement depends on external factors that cannot be predicted today. The same applies to profit before tax.


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