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  3. Strategy
  4. Outlook

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Outlook

The Volkswagen Group Board of Management anticipates a negative growth rate in the world economy in 2020 as a result of the spread of the SARS-CoV-2 virus. We also continue to believe that risks will arise from protectionist tendencies, turbulence in the financial markets and structural deficits in individual countries. In addition, growth prospects will be negatively impacted by continuing geopolitical tensions and conflicts. We expect both the advanced economies and the emerging markets to experience a marked decline ineconomic performance. Despite this, we expect economic recovery to commence in the course of 2020.

In response to the Covid-19 pandemic, we have developed scenarios for the development of the passenger car markets in individual regions in 2020 which, for example, also take account of the trends currently being experienced in China. The scenarios reflect the different timings of the spread of the Covid-19 pandemic in the various geographic regions. In all, we expect the volume of global demand for new vehicles in2020 to be between 15 and 20% lower than it was the previous year. In Western Europe, we anticipate a fall of around 25% in the volume of new passenger car registrations in 2020 compared to the prior year. Following the drastic decline at the beginning of the second quarter and the marked recovery over the course of the three months, we believe that the market will continue to recover in the third and fourth quarters of 2020, with prior-year levels being reached in individual months. We have assumed a similar but more stable trend for the passenger car markets in Central and Eastern Europe and expect the year-on-year fall in the number of sales in 2020 to be somewhat less sharp here. The volume of demand in the markets for passenger cars and light commercial vehicles (up to 6.35 tonnes) in North America in 2020 is likely to be 25 to 30% lower than in the prior year. We anticipate that following the drastic decline at the beginning of the second quarter and a slight recovery as the period progressed, the remaining quarters of 2020 will register only a sideways trend in the market. We expect to see new registrations of passenger cars and light commercial vehicles in the South American markets fall by up to 40% in 2020 compared with the previous year. After the drastic decline in the second quarter, the market is expected to witness only a slow and gradual recovery in the third and fourth quarters, though falling short of the levels recorded in the previous year. The passenger car markets in the Asia-Pacific region are likely to be between 10 and 15% below the prior-year level in 2020. After the very sharp decline in the first three months and the rapid rebound in the second quarter, we expect a return to prior-year levels in the remaining quarters of 2020.

Trends in the markets for light commercial vehicles in the individual regions will also be mixed in 2020; on the whole, we anticipate a marked fall in demand due to Covid-19.

In the markets relevant for the Commercial Vehicles Business Area, we expect a substantial year-on-year fall in 2020 in new registrations for both mid-sized and heavy trucks with agross weight of more than six tonnes and for buses.

In our view, automotive financial services will again be very important for vehicle sales worldwide in 2020.

Our brand diversity, our presence in all major world markets, our broad and selectively expanded product range, and our technologies and services put us in a good competitive position worldwide. As part of the transformation of our core business, we are positioning our Group brands with an even stronger focus on their individual characteristics, and are optimizing the vehicle and drive portfolio. The focus is primarily on our vehicle fleet’s carbon footprint and on the most attractive and fastest-growing market segments. In addition, we are working to leverage the advantages of our multibrand Group even more effectively with the ongoing development of new technologies and the enhancement of our toolkits.

We anticipate that deliveries to Volkswagen Group customers will be significantly down on the previous year in2020 due to the impact of the Covid-19 pandemic.

Challenges will also arise particularly from the increasing intensity of competition, volatile commodity and foreign exchange markets and more stringent emissions-related requirements.

We expect the sales revenue of the Volkswagen Group and itsdivisions to fall significantly below the previous year’s level in 2020 as a result of the Covid-19 pandemic. We anticipate a severe year-on-year decline in the operating result before and including special items for the Volkswagen Group and its Passenger Cars Business Area as well as in the operating result for the Commercial Vehicles Business Area. In the Power Engineering Business Area and in the Financial Services Division, we expect the pandemic to have less of an impact on the operating result in 2020 due to their business models. For the Power Engineering Business Area, we anticipate a significantly higher operating loss than that of the previous year. For the Financial Services Division we forecast a significant drop in the operating result compared with the prior year. Overall, we expect the Volkswagen Group’s operating result for 2020 before and including special items to be in positive territory.

Wolfsburg, Juli 2020

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