#1VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Financial Services Strategy and business development in China Harald Müller General Manager, Volkswagen Finance (China) Co., Ltd. Beijing, 14 April 2015#2VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Group - Leveraging the power of three strong pillars VOLKSWAGEN AKTIENGESELLSCHAFT Automotive Division Passenger Cars (1) S ŠKODA Audi LAMBORGHINI SEAT 8 BUGATTI BENTLEY PORSCHE Remaining companies DUCATI Commercial Vehicles / Power Engineering Financial Services Division Volkswagen Financial Services VOLKSWAGEN FINANCIAL SERVICES AKTIENGESELLSCHAFT Europe/Asia-Pacific / North and South America Commercial Vehicles Financial Services USA/Canada / Spain / Argentina SCANIA Scania Financial Services Porsche Holding Financial Services MAN Porsche Financial Services 2#3VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Financial Services offers the whole range of services • BANK LEASING INSURANCE MOBILITY Bank Direct Bank Services Rental • . Retail Finance Deposits Dealer Finance • Factoring • Instalment Loans • Investment Products • Finance Lease • Operating Lease Investor Meeting | VW FS AG | April 2015 • Automotive • • Payment Protection Industry Fleet Management • Tyre Wear & Tear • • • Long-term Rental Short-term Rental Car Sharing 3#4VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Strong benefits for automotive through captive Equipment Turnover + 3% D 7.2 103% 207 +25% Length of ownership (years) 5.4 Brand Loyalty + 11% Cash Payer Captive Customer 65% 54% 46% 35% 100% Cash Payer Captive Customer Cash Payer Captive Customer Switch to Competitor Stay Loyal EU-5 markets Investor Meeting | VW FS AG | April 2015 4#5VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Financial Services in China CBRC regulated VOLKSWAGEN FINANCE VOLKSWAGEN NEW MOBILITY SERVICES CHINA COMPANY LIMITED INVESTMENT COMPANY LIMITED Retail Finance. Wholesale Finance. Investor Meeting | VW FS AG | April 2015 ŠKODA MofCom regulated Leasing. Insurance. After Sales. New Mobility. S SEAT 上海大众汽车 W SHANGHAI VOLKSWAGEN 一汽-大众 BUGATTI DUCATI SCANIA MAN FAW-VOLKSWAGEN Commercial Audi Vehicles LAMBORGHINI B BENTLEY PORSCHE 5#6VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Finance (China) Co., Ltd. - Overview Volkswagen Finance (China) Co., Ltd. Facts & Figures China Beijing Investor Meeting | VW FS AG | April 2015 Fu Rong Lu • MGLASMAGEN PUNANCIAL SERVces • Foundation: 2004 • Shareholder: 100% Volkswagen Financial Services AG Total Assets: RMB36.8 bn¹) Employees: 7631) Awards: Top Employers China 2013, 2014 & 2015 Best AFC 2012, 2013 & 2014 Regulator: China Banking Regulatory Commission (CBRC) • Board of Directors: R. Fleger, F. Witter, L.-H. Santelmann, C. Isensee, W. Soh General Management: • J. Kurzrock, H. Müller, J. Huang 1) as of 31 December 2014 6#7VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen New Mobility Services Investment Co., Ltd. - Overview Volkswagen New Mobility Services Facts & Figures China Beijing Investor Meeting | VW FS AG | April 2015 Fu Rong Lu • Foundation: December 2011 MGLASMAGEN PUNANCIAL SERVces • • • • . Shareholder: 100% Volkswagen Financial Services AG Employees: 1791) 7 leasing subsidiaries ¹) + 7 leasing branches¹) 1 consulting subsidiary Board of Directors: R. Fleger, F. Witter, L.-H. Santelmann, C. Isensee, W. Soh General Management: P. Tempich, R. Yeo 1) as of 31 December 2014 including branches and subsidiaries 7#8VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Financial Services China: Three strategic growth dimensions 一汽-大众 FAW-VOLKSWAGEN Audi Audi SEAT LAMBORGHIN BUGATTI BENTLEY ŠKODA PORSCHE PORSCHE DUCATI ŠKODA 上海大众汽车 Commercial SCANIA İMANI Vehicles SHANGHAI VOLKSWAGEN 上海大众汽车 SHANGHAI VOLKSWAGEN Financing/ Fleet Used Cars After Sales/ Mobility Leasing Management Insurance Investor Meeting | VW FS AG | April 2015 After Sales / Insurance Financing / Leasing Mobility Used Cars Fleet Management 8#9VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Traditionally, "Cash was King" when buying a car In the past... Today... NVIA NVAX ...cash was the first choice to buy cars! Investor Meeting | VW FS AG | April 2015 Financed CO Financed ...every 5th new car in China is financed! 9#10VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY In the future, consumers are expected to increasingly turn to financing In the past... Tomorrow... NVIA NVAX Financed Financed CO Financed Financed CO ...cash was the first choice to buy cars! ...every 3rd new car will be financed! Investor Meeting | VW FS AG | April 2015 10#11VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Gaining share in an expanding retail financing market Volkswagen Finance (China) retail finance penetration in the Volkswagen Group China network 2007 Cash Finance (% of deliveries to customers) 2014 Cash Finance 2018e Cash Finance 90% 10% 72% 28% 11% 17% 7.7% 2.3% 67% 33% 15% 18% VW FS Others VW FS Others VW FS Others Investor Meeting | VW FS AG | April 2015 11#12VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Growth dimension: Strong retail finance development in Volkswagen Finance New retail finance contracts Volkswagen Finance (China) (number of units) 227,000 149,000 78,000 2011 Investor Meeting | VW FS AG | April 2015 406,000 2012 2013 2014 12#13VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Managing growth is the key challenge for Volkswagen Finance (China) Earning assets (in RMB bn) II Wholesale ■Retail 9.4 1.4 2011 +236 % 33.3 3.0 2014 More and more complex regulatory environment, locally and internationally High demand from the financing industry for experts in the labor market Limited funding diversification in the still restricted Chinese financing market Investor Meeting | VW FS AG | April 2015 13#14VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Funding structure Volkswagen Financial Services Total 137.4 bn Strategic Funding Sources Deposits ABS Capital Markets Others € 9.2 bn (6.7%) Liabilities to affiliated companies € 15 bn (11%) Equity € 15.2 bn (11%) Asset Backed Securitization € 21.1 bn (15.3%) Bonds issued € 33.6 bn (24.5%) Customer Deposits € 26.2 bn (19.1%) Liabilities to financial institutions € 12.9 bn (9.4%) Commercial Paper € 4.2 bn (3%) Investor Meeting | VW FS AG | April 2015 strategic funding allocation as of 31 December 2014 14#15VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Funding structure of Volkswagen Finance (China) Total RMB36.8 bn as of 31 December 2014 Strategic Funding Sources Deposits ABS Capital Markets Investor Meeting | VW FS AG | April 2015 Actual Funding Allocation Liabilities to Others RMB0.8bn (2%) Equity RMB5.0bn (15%) ABS RMB0.4bn (1%) affiliated companies RMB6.4bn (17%) Dealer Deposits RMB0.3bn (1%) Liabilities to financial institutions RMB 24.1bn (64%) 15#16VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Financial Services' ABS activities VCI VCCI VALET program, VALT program DFM DFM Master program VW FS UK Driver UK Master, Driver UK program, Feasibility study VW Bank France Driver France program VW Finans Sverige Feasibility study - now also in China VW Bank / VW Leasing / MAN FS Driver-& VCL-program, VCL Master, Driver Master, VCL Master Trucknology VW FS Korea Feasibility study project established established + project Investor Meeting | VW FS AG | April 2015 VW Finance Spain Driver España program Banco VW Brazil Driver Brasil program VW FS Australia Driver Australia program VW FS Japan Driver Japan program VW Finance China Driver China program 16#17VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY ABS program - Driver China one • Program history: Established in 2014 Assets . Issuer type: Trust • Asset volume: RMB800 m • • Underlying asset class: Car loans Residual value risk: no Balloon loans: yes 100% 1.2% Well established global program TSI certification Investor Meeting | VW FS AG | April 2015 Liabilities Format: Listed and Rated Securities National Interbank Market Denomination: RMB 100 87.4% Pricing: Class A 4.80% fixed rate Class B 8.08% fixed rate . Rating agencies: 5.5% 6.6% 0.5% CCXI, Lianhe, China Rating, Fitch, Moody's Rating (sf): Class A: AAA/AAA/AA+ / Aa / Aa3 Class B: A+ / A+ / A / A- / Baa2 Reporting adheres to requirements for Five Star Fitch Grading Modelled on Intex 17#18Driver China one: Awards IFR AWARDS 2014 IFR Global Awards 2014: Asia-Pacific Structured Finance Issue VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY GlobalCapital Asia ASIAMONEY Global Capital Asia Capital Markets Awards: Best Securitization CSF 中国资产证券化论坛 China Securitization Forum IFRASIA AWARDS 2014 IFR Asia Awards 2014: Structured Finance Issue of the Year ASIAN ASSET AS A THAsset TRIPLE AWARUS The Asset Triple A Regional Awards 2014: Best Domestic Securitization China Securitization Forum Awards 2014: Top Ten Securitization Issue of the Year (Credit Assets) • the first ABS onshore to get international ratings; the first auto securitization in China to offer a fixed rate of interest; the first China ABS to have a target overcollateralization scheme; the first China ABS to adopt servicer advance mechanism; the first China ABS to set up prefunded cash collateral account; the first China ABS to adopt sequential plus targeted-OC-level repayment mechanism; the first China ABS to use discounted principal balance; the first ABS onshore to be certified by TSI (True Sale International). Investor Meeting | VW FS AG | April 2015 18#19VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Financial Services: Risk management is a core competence Identification and Strategy Risk inventory Business & Risk Strategy Risk-bearing capacity / limit system Methods, Processes, Systems Development and Implementation of appropriate methods, processes and systems for all substantial risk categories Monitoring and active control Central requirements (crash barriers) Business Financial Reviews Investor Meeting | VW FS AG | April 2015 Efficient Risk Control Quantification and Reporting Assessment of Risk parameter Ongoing Portfolio analysis Risk Reporting Group-wide Risk transparency 19#20VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Risk Management Volkswagen Finance (China) Other Risks³) Market Price Risk²) Operational Risk¹) Credit Risk Portfolio Structure Corporate 8% Retail 92% 1) Based on Operational Risk Self-assessment result of 2014, which is the estimation of typical operation loss amount. 2) Simulation Result based on HQ's market price risk assessment, no influence for VWFC Balance Sheet. 3) Including Residual Value Risk, Liquidity Risk, Strategic Risk, Reputational Risk, Shareholder Risk + Issuer Risk, which are handled in HQ Risk Bearing Capacity. Investor Meeting | VW FS AG | April 2015 20 20#21VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Credit Risk - Volkswagen Finance (China) vs. Volkswagen Financial Services Provision Ratio 2.2% VW FS China 0.7% 2.0% 2.0% 1.80% 1.4% 3.9% 1.1% 1.1% 2.1% 2.0% Provision Ratio 1.2% 0.7% 0.8% 1.0% 1.0% Volkswagen Finance (China) Investor Meeting | VW FS AG | April 2015 2011 2012 2013 2014 Retail Corporate 21#22VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Growth dimension: Volkswagen Operating Leasing (Fleet Management) Volkswagen Leasing operates in 14 major cities via subsidiaries and branches - Beijing Potential expansion to more than 30 cities in total Key customers: Cargill SIEMENS 北京市人民政府 会 中国移动通信 CHINA MOBILE (Beijing Peoples Gov.) ALSTOM WURTH OTIS mmmm SAINT-GOBAIN Atlas Copco Microsoft edh JUNGHEINRICH OU PONT DECATHLON Freudenberg 迪卡侬 SANDVIK VOITH Current Operations Foshan Shenzhen Guangzhou M novo nordisk Start Operations in 2015 ZE Red Bull Engineered reliability. Investor Meeting | VW FS AG | April 2015 Changchun Shenyang Tianjin Dalian Shijiazhuang Qingdao Nanjing Wuxi Suzhou Shanghai Hangzhou Ningbo Wuhan Chongqing Chengdu 22 22#23VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Growth dimension: After Sales Services Example market India Volkswagen Fully Loaded Fretended Maintenance 3417 Road Side EMI 9,999 (Pollo) + Womanry fee & years 3 years Assle for 3 years All your needs taken care of in an EMI for 36 months. To test drive, call tall-Bee 24x7 1800 209-01909/1800 102 0909, or visit our nearest dealer Hurry! Offer valid till 25 July Test drive it today! EMI 14,699 (Vento) Walkwegen. Das Aus Flexible package approach to meet the diversified needs of Chinese dealers / consumers 口% 一年期0利率 即日起至3月30日期间,凡采用分期贷誠购买附體R 高尔夫R的用户均可以享受大众汽车金融提供的车 貸优惠,选择一年期、利率低至0%,轻松專車高歷 高尔夫R新生活。 根据不同的还款计划,大众汽车金融还为能设计了更多优惠利率、多种方案供选择,让更多的消费者能够 更加轻松地拥有大众经典车型,实现心中的梦想。 5 1年轻松个人计划 ·年无里程限制保修 年免費道路救援 Fully at Samachar Mumbai Ad 33 (W) X 20 CM Investor Meeting | VW FS AG | April 2015 www.ant Volkswagen Finance 大众汽车金融 大众进口汽车途锐, 耀疆“5年轻松个人计划”豪情开启! 8月1日至9月30日,购途锐威辉腾,尊享5年无里程限制保修5年免费道路救援,共价值5.5-6万超值礼包,提前5年进阶豪华! 來越相承,专享5年免费直路軟策,关怀一路随行、桃享1年高黎第三省贵扫险,需建铃车颕有礼遗价载1.5万,馬茸國享所有礼還焗薯作,更有大众汽车 RES A ** • ZORNERED, RUSEDBERGAN. 15年 李之道,唯大众。 Das Auto 23#24VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Growth dimension: Mobility / Car Sharing (Pilot Concept) VRE FAZE RENT Pilot project by VW New Mobility Services 1st premium corporate car sharing in Beijing VRent is a keybox and station based system providing... Investor Meeting | VW FS AG | April 2015 Companies in Towers > on demand access > to VW-Group Vehicles 24#25VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Finance (China) is Top Employer, because our employees are our key to success top 2013 top 中国杰出雇主 CHINA 中国杰出雇主 CHINA EMPLOYER 2014 CERTIFIED BY THE CRF INSTITUTE EMPLOYERS CERTIFIED EXCELLENCE IN EMPLOYEE CONDITIONS top EMPLOYER 中国杰出雇主 CHINA 2015 CERTIFIED EXCELLENCE IN EMPLOYEE CONDITIONS Investor Meeting | VW FS AG | April 2015 25 25#26VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Summary ✓ Together with the fascinating brands of the Volkswagen Group, ✓ the global experience of Volkswagen Financial Services, ✓ our highly dedicated employees ✓ and our exciting new products... ... Volkswagen Finance (China) and Volkswagen New Mobility Services will serve all mobility needs of the Chinese customer also in the changing environment! Investor Meeting | VW FS AG | April 2015 26#27Disclaimer VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY The following presentations contain 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 renminbi 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. This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities. Investor Meeting | VW FS AG | April 2015 27#28VOLKSWAGEN FINANCIAL SERVICES THE KEY TO MOBILITY Volkswagen Financial Services Strategy and business development in China Harald Müller General Manager, Volkswagen Finance (China) Co., Ltd. Beijing, 14 April 2015 28