Business Development

 

The upturn in the global economy continued in 2007. However, it slowed in the second half of the year in many countries owing to the sustained high commodity and energy prices and the crisis on the US mortgage market. In total, global economic growth was 3.4%, compared with 3.7% in 2006.

 

There was a marked decline in US economic growth, from 2.9% in 2006 to 2.2% in 2007. This was due above all to the crisis on the real estate market. The current account deficit remained high, although the dollar fell noticeably in value. Canada’s gross domestic product (GDP) grew by 2.6% (2.8%). The expansion rate of the Mexican economy declined from 4.8% to 3.2% owing to its heavy dependence on the USA.

 

 

The strong growth continued in the two largest South American countries, Brazil and Argentina. Brazil recorded 5.2% (3.7%) growth in GDP with only a moderate increase in inflation. The Argentinian economy grew at a rate of 8.4% compared with 8.5% in 2006. The high inflationary pressure was only slightly reduced. The rate of expansion in South Africa was 5.0%, marginally lower than the previous year (5.4%).

 

 

Economic growth in the Asian emerging markets remained unabated in 2007. At 11.4%, China’s growth was once again up on the previous year (11.1%). By contrast, in spite of the weak yen and the very low level of interest and inflation, Japan only recorded GDP growth of 2.1% (2.4%). India continued its strong economic expansion with a growth rate of 8.8% (9.4%).

 

 

Growth in Western Europe slowed in the course of 2007. However, growth (2.7%) remained only marginally below the previous year’s level (2.9%). Average unemployment in the euro zone fell to 7.4% (8.3%). The euro reached new highs against the US dollar and the yen. The strong growth in Central and Eastern Europe continued (6.3%). Only Hungary recorded a sharp decline in its rate of expansion with 1.3% (3.9%).

 

 

The growth rate of the German economy declined from 2.9% to 2.5% in 2007. In spite of the strong euro, exports remained a key growth factor, while private consumption failed to gain momentum. Average unemployment fell significantly from 10.8% to 9.0%.

 

 

Index is based on month-end rates, December 31, 2006 = 100

 

 

 

 

Global demand for passenger cars increased by 4.2% to 58.4 million vehicles in 2007. The South American, Central and Eastern European, and Asia-Pacific markets in particular recorded above-average growth rates. However, demand for passenger cars continued to fall in North America and especially in Japan. Overall, new passenger car registrations in Western Europe were on a level with the previous year. In the reporting period, global automotive production increased by 5.6% to 71.9 million units, of which 60.4 million were passenger cars (+5.5%).

 

 

Demand on the North American market for passenger cars and light commercial vehicles was 2.1% lower in 2007 than in the previous year. Vehicle sales weakened above all in the US automotive market, which was affected by the crisis on the real estate market and other factors. Year-on-year losses were recorded by both the passenger car segment (–2.6% to 7.6 million vehicles) and the light commercial vehicle segment (–2.3% to 8.6 million units). In Canada, by contrast, sales increased by 3.0% to 1.7 million vehicles in 2007. On the Mexican market, sales volumes declined year-on-year for the first time since 2003, with demand falling by 3.5% to 1.1 million units.

 

 

The positive development of the South American automotive markets continued in 2007 for the fourth year in a row. In Brazil, vehicle sales rose to a new record level. A total of 2.3 million passenger cars and light commercial vehicles were newly registered (+27.8%), well above the previous high from 1997 (1.9 million vehicles). Total unit sales in the truck segment were also up on the previous year, increasing by 31.9% to 100 thousand units. By contrast, a total of 787 thousand vehicles were exported, 6.6% fewer than the figure for 2006. Demand for passenger cars in Argentina also reached a new high in 2007, increasing by 28.9% to 402 thousand units. However, the South African passenger car market declined by 9.7% year-on-year with total sales of 435 thousand vehicles.

 

 

The number of new passenger car registrations in the Asia-Pacific region continued to rise in 2007. By far the greatest increase in demand was recorded by the Chinese automotive market, which grew by 927 thousand units to 5.1 million. This means that China has advanced to become the world’s second largest passenger car market, behind the US. In the world’s third largest market – Japan – there was a substantial fall in the number of newly registered passenger cars. The sales volume of 4.4 million passenger cars was 5.2% less than in the previous year. The strong growth on the Indian automotive market continued, with passenger car sales increasing by 16.0% to 1.2 million units.

 

Percentage change in GDP

 

 

 

In 2007, demand for passenger cars in Western Europe remained flat at 14.9 million vehicles, just 0.2% up on the previous year’s level. Further rises in fuel prices also led to an increase in the percentage of diesel vehicles sold, to 53.3% (51.3%). The Italian passenger car market benefited from the scrapping premium introduced at the beginning of the year. The other major markets recorded a mixed performance: while demand increased slightly in the UK and France, the volume of new car registrations in Germany and Spain fell year-on-year. By contrast, the number of new passenger cars registered in Central and Eastern Europe increased substantially. As was the case last year, there was strong market growth in Russia (+37.5%) and the Ukraine (+46.2%). The passenger car markets of Central European EU countries developed dynamically in 2007, notably in the two volume markets of Poland (+22.7%) and Romania (+23.3%). Sales of passenger cars in Turkey continued to weaken (–4.2%).

 

 

Demand for automobiles in Germany decreased by 7.6% to 3.5 million vehicles in 2007. While there was an increase in both commercial vehicle and passenger car registrations by business customers, there was a marked fall in demand for passenger cars among private customers. The main reason for the negative trend in the entire passenger car market (–9.2% to 3.1 million vehicles), besides general consumer reluctance, was the high number of vehicles purchased in the final months of 2006 prior to the VAT increase as of January 1, 2007. New registrations of trucks with a gross vehicle weight of up to six tonnes increased by 12.4% to 222 thousand units. Thanks to a record level of exports (+11.1% to 4.6 million vehicles), German manufacturers also reached a new production high of 6.2 million vehicles (+6.5%).

 

 

 

In 2007, the Volkswagen Group again updated and expanded its model range. This now consists of well over 100 passenger car and commercial vehicle models in virtually all segments: from small cars to super sports cars in the passenger car sector, and from urban delivery vehicles to heavy trucks in the commercial vehicles sector. We will gradually move into new market segments, insofar as it is profitable to do so.

 

As regards the Volkswagen Passenger Cars brand, the most important new models launched in Europe over the past fiscal year were the “Cross” versions of the Touran and the Golf and, above all, the new Golf Variant and the Tiguan. The latter is set to assume a leading position in the rapidly expanding compact SUV class with its customer-oriented equipment features. In 2007, the Audi brand once again demonstrated its sporty side with the Audi R8, a sports car with a fascinating design, as well as with the new Audi A5 series.

 

 

Vehicles in thousands

 

 

In addition, Audi launched the impressive new Audi A4 saloon and Audi TT Roadster models. With the new Škoda Fabia Hatchback, Škoda presented a worthy successor to its successful volume model. SEAT premiered the SEAT Altea Freetrack, a vehicle with typical off-road qualities, as well as launching the sporty SEAT Leon Cupra*. This year also saw the Lamborghini brand showcase the Gallardo Superleggera*, which sets new standards in technology and sportiness. The Bentley brand presented the Bentley Continental GT Speed Coupé* – the world’s fastest four-seater, with 610 PS (449 kW). With the Caddy Maxi and its longer wheelbase, Volkswagen Commercial Vehicles presented a superior, contemporary solution for many transport problems in professional and private life. With the highly successful mobility packages, which have been further developed a number of times, Volkswagen Financial Services AG once again demonstrated its innovative contribution to the Group’s product range over the past fiscal year.

 

* Consumption and emission data.

 

 

 

In fiscal year 2007, the Volkswagen Group delivered 6,188,959 vehicles to customers worldwide, thereby exceeding the 6 million sales mark for the very first time. This corresponds to a year-on-year increase of 7.9%. As can be seen from the chart shown on this page, the delivery figures for all twelve months of 2007 outperformed the same month in the previous year. All Group brands increased their sales figures; with the exception of SEAT, they also set new records. Especially encouraging growth rates were achieved by the Škoda and Volkswagen Commercial Vehicles brands, with 14.6% and 10.7% respectively. As well as this, our Bentley, Lamborghini and Bugatti brands generated impressive growth rates in the premium vehicle segments. The following table gives an overview of deliveries to customers by market and the respective passenger car market share in fiscal year 2007. Sales trends in the individual markets are as follows.

 

In Western Europe, deliveries to Group customers increased slightly year-on-year. The majority of our vehicles –50.3% (54.2%) of the total delivery volume – were sold here. All Group brands, with the exception of the Volkswagen Passenger Cars and SEAT brands, exceeded their sales figures for 2006. Substantial growth rates were also recorded by the Eos, Phaeton, Audi TT Coupé, Audi A6 allroad quattro, Audi Q7 and Škoda Roomster models. Demand for the new Golf Variant, Audi A5, Audi TT Roadster, Škoda Fabia Hatchback and SEAT Altea XL models also increased. The Volkswagen Group’s share of the entire Western European passenger car market almost reached the high level of the previous year with 19.5% (19.8%), thus making the Group the continued market leader.

 

 

 

1	Deliveries and market shares for 2006 have been updated to reflect subsequent statistical trends.
2	Overall markets in the USA, Mexico and Canada include passenger cars and light trucks.