Report of the Supervisory Board

(in accordance with section 171(2) of the AktG)

Ladies and Gentlemen,

During the last fiscal year, the Supervisory Board dealt regularly and in detail with the situation and the development of the Volkswagen Group. In compliance with legal requirements and the German Corporate Governance Code, we provided advice and support to the Board of Management in questions relating to the running of the Company. The Supervisory Board was consulted directly with regard to all decisions of fundamental significance to Volkswagen. Current strategic considerations were discussed with the Board of Management at regular intervals.

The Board of Management provided the Supervisory Board with regular, complete and prompt verbal and written reports on all key issues for the Volkswagen Group relating to planning, the development of business, the position of the Group including the risk situation and risk management, and current matters. Documents relevant to our decisions were always made available to us in good time prior to each Supervisory Board meeting. Furthermore, the Board of Management provided us with detailed monthly reports on the current business position and a forecast for the year as a whole. The Board of Management explained any variations from the defined plans and targets in a comprehensive verbal or written account. Reasons for these variations were discussed in detail together with the Board of Management so that suitable countermeasures could be taken if required.

In 2007, the Supervisory Board held four ordinary meetings and three extra­ordinary meetings. In addition, the constituent meeting of the Supervisory Board took place on April 19, 2007. Average attendance was 95%. All members were present at more than half of the meetings. Resolutions regarding urgent business transactions were also adopted in writing by means of a circulated document.

COMMITTEE ACTIVITIES

In order to perform its duties, the Supervisory Board has established four committees: the Presidium and the Mediation Committee in accordance with section 27(3) of the Mitbestimmungsgesetz (MitBG – German Codetermination Act) as well as the Audit Committee and the Shareholder Business Relationships Committee (AfGA). The Presidium is composed of three shareholder representatives and three employee representatives. The remaining committees are each composed of two shareholder representatives and two employee representatives. Membership of the committees at the end of 2007 is indicated in the list on this page.

In 2007, the Presidium of the Supervisory Board met eight times; in particular, it prepared the resolutions by the Supervisory Board and decided on issues relating to contracts with the Board of Management.

The Mediation Committee was not required to convene during the year. Among other things, the Shareholder Business Relationships Committee supervises Volkswagen AG’s and its Group companies’ business relationships with Volkswagen AG shareholders who hold at least 5% of voting rights. Another of its key tasks is to monitor compliance with the business processes established by the Board of Management which were put in place to structure legal relationships with shareholders in accor­dance with agreements. The Committee met four times in the reporting period.

The Audit Committee met four times in 2007. It was primarily concerned with the consolidated financial statements, risk management and the establishment of a com­pliance organization introduced by the Board of Management. The Audit Committee also dealt with the interim reports, matters relating to financial reporting and the audit of the financial statements by the auditors.

TOPICS DISCUSSED BY THE SUPERVISORY BOARD

At its meeting on January 11, 2007, the Supervisory Board appointed Prof. Dr. Jochem Heizmann as a member of the Group Board of Management with responsibility for Production and agreed to the Board of Management’s plans to place all individual Group brands on an equal, independent footing in future. In addition, we resolved to reject MAN AG’s offer to acquire Scania and instructed the Board of Management to work towards an amicable merger of MAN and Scania.

At the Supervisory Board meeting on March 2, 2007, we thoroughly examined and subsequently approved the annual financial statements of Volkswagen AG and the consolidated financial statements prepared by the Board of Management for 2006.

At the extraordinary meeting on May 11, 2007, we examined in detail the public mandatory bid by Dr. Ing. h.c. F. Porsche Aktiengesellschaft (now Porsche Automobil Holding SE) of April 30, 2007. Following this, we published our statements in accordance with section 27 of the Wertpapiererwerbs- und Übernahmegesetz (German Securities Acquisition and Takeover Act). On the basis of various financial analyses that we con­sidered, we satisfied ourselves that the fundamental valuation of Volkswagen shares is higher than the prices contained in the mandatory bid for Volkswagen AG’s ordinary and preferred shares. In light of this valuation and of the higher quoted market prices for Volkswagen ordinary and preferred shares during the period of the mandatory bid, we concluded that we could not recommend acceptance of the mandatory bid to the shareholders of Volkswagen AG. To avoid any appearance of a conflict of interest and any possible influence being exerted during the resolution of this statement, the members of the Supervisory Board who are also members of the Board of Management of Porsche Automobil Holding SE and the Chairman of the Supervisory Board abstained from voting.

At its meetings on April 18, 2007, July 5, 2007, and September 7, 2007, the Super­visory Board concerned itself predominantly with strategic issues. In September 2007, the Board of Management informed the Supervisory Board of the status of talks with the Malaysian government concerning the possibility of a partnership or an investment in the Malaysian car manufacturer Proton. In November 2007, the decision was taken not to pursue these talks.

On November 16, 2007, we discussed in detail the Volkswagen Group’s financial and investment planning for 2008 to 2010 and approved the Board of Management’s plans.

CORPORATE GOVERNANCE AND DECLARATION OF CONFORMITY

The implementation of the German Corporate Governance Code at Volkswagen was the focus of our meeting on November 16, 2007. In this context, we also discussed in particular the new recommendations and suggestions published by the “Government Commission on the German Corporate Governance Code” on July 20, 2007. On December 20, 2007, together with the Board of Management, we issued the declaration required under section 161 of the Aktiengesetz (AktG – German Stock Corporation Act) regarding compliance with the recommendations of the Code. The Board of Management and the Supervisory Board comply with all recommendations of the Code with one exception. The exception affects the recommended formation of a Nomination Committee. In the opinion of the entire Supervisory Board, such a Committee would only increase the number of committees without improving the work of the Supervisory Board. The suggestion of the Code to provide for a cap on severance payments when entering into Board of Management agreements will not be complied with. Doubt is cast in professional circles on the effectiveness of such contractual clauses and this reduces the ability of the Supervisory Board of Volkswagen AG to act without, on the other hand, offering significant advantages in view of the applicable legal situation. The joint declaration of conformity by the Board of Management and the Supervisory Board is permanently available on the Volkswagen AG website at www.volkswagenag.com/ir. Further information regarding the implementation of the recommendations and suggestions of the German Corporate Governance Code can be found in our Corporate Governance Report and in the Notes to the Consolidated Financial Statements.

AUDIT OF ANNUAL AND CONSOLIDATED FINANCIAL STATEMENTS

The Annual General Meeting on April 19, 2007 appointed PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft as auditors for fiscal year 2007. The auditors audited the annual financial statements of Volkswagen AG, the consolidated financial statements of the Volkswagen Group and the combined management report. They issued unqualified audit reports on all of these documents. The auditors also assessed the risk management system, concluding that the Board of Management had taken the measures required by section 91(2) of the AktG to ensure early detection of any risks endangering the continued existence of the Company.

The documentation relating to the annual financial statements and the audit reports were made available to the members of the Audit Committee and the Supervisory Board in good time for the meetings on February 27, 2008 and February 29, 2008, respectively. At both meetings, the auditors reported extensively on the principal findings of their audit and were available to provide additional information if required.

Taking into consideration the audit reports and the discussion with the auditors as well as their own conclusions, the Audit Committee prepared the documents for our own review of the consolidated financial statements, the annual financial statements of Volkswagen AG and the combined management report and reported on this in our meeting on February 29, 2008. Furthermore, the Audit Committee recommended that we approve the annual financial statements. We reviewed the documents on the basis of this report and the audit report as well as in talks and discussions with the auditors. The assessment of the position of the Company and the Group presented by the Board of Management  in the management report corresponds to the assessment by the Supervisory Board. At this meeting, we also discussed the question of whether a dependent company report must be prepared. A majority of Supervisory Board members resolved that no dependent company report must be prepared. At our meeting on February 29, 2008, we  concurred with the auditors’ findings and approved the annual financial statements prepared by the Board of  Management and the consolidated financial statements. The annual financial statements are thus adopted. We reviewed the proposal on the appropriation of net profit submitted by the Board of Management, taking into account in particular the interests of the Company and its shareholders. We endorsed the proposal by the Board of Management due above all to the Company’s positive earnings trend and liquidity development.

MEMBERS OF THE SUPERVISORY BOARD AND BOARD OF MANAGEMENT

In the election of the employee representatives to the Supervisory Board on April 12, 2007, Peter Jacobs, Chairman of the Works Council of the Emden plant, was elected to Volkswagen AG’s Supervisory Board for the first time as the successor to Andreas Blechner and Wolfgang Ritmeier, Chairman of the Volkswagen Management Asso­ciation, was elected to Volkswagen AG’s Supervisory Board for the first time as the successor to Ulrich Neß. The remaining employee representatives on the Supervisory Board were re-elected for a further term of office.

Following the 47th Annual General Meeting, the Supervisory Board elected Prof. Dr. Ferdinand Piëch as the Chairman of the Supervisory Board at its constituent meeting on April 19, 2007.

On August 3, 2007, Heinrich Söfjer, Chairman of the Works Council of Volkswagen Commercial Vehicles, was appointed by court order as a member of Volkswagen AG’s Supervisory Board. He succeeded Günter Lenz, who resigned his membership of the Supervisory Board effective July 31, 2007.

Elke Eller left the Supervisory Board of Volkswagen AG on September 30, 2007. Babette Fröhlich was appointed by the court to succeed her as a member of the
Supervisory Board effective October 25, 2007.

Dr. Wolfgang Bernhard left the Company effective January 31, 2007.

Prof. Dr. Folker Weißgerber, formerly a member of Volkswagen AG’s Board of Management, died at the age of 66 on August 25, 2007. Folker Weißgerber worked for the Company for a total of 44 years and played a significant part in the global success of the Volkswagen Group. He was a member of the Group Board of Management from March 1, 2001 to June 30, 2005, where he was responsible for Production. We will honor his memory.

We would like to thank the members of the Board of Management, the Works Council, the management and all the employees of Volkswagen AG and its affiliated companies for their efforts and achievements over the past year.

Wolfsburg, February 29, 2008

Dr. Ferdinand K. Piëch,
Chairman of the Supervisory Board