Management Report

Business Development

Global economic growth and the positive trend in the global automotive markets both continued in 2006. Thanks to its attractive new models, the Volkswagen Group benefited disproportionately from this positive development.

Net Assets, Financial Position
and Results of Operation

Group earnings affected by restructuring expenses, corporation tax credit and sales of companies. Marked improvement in operating profit before special items and in Volkswagen Group’s liquidity. Automotive Division cost structure optimized.

Volkswagen AG (condensed,
according to German Commercial Code)

Value-Enhancing Factors

Sustainable economic success demands competitive costs, innovative products and efficient processes. Customer satisfaction is the focal point of our efforts. Among the Volkswagen Group’s key advantages are the expertise and commitment of its employees. The responsible use of environmental resources is a priority in all parts of the Group.

Risk Report

A responsible approach to managing risks is a fundamental requirement for sustainable business success. Our activities are managed systematically according to the exact specifications of a comprehensive risk management system.

Report on Expected Developments

In spite of high oil and commodity prices, the global economy and global automotive demand will both continue to grow in 2007. Thanks to its expanded model range and innovative services, the Volkswagen Group expects deliveries to be slightly higher than in 2006.