Group Management Report

Business Development

The world economy recorded positive growth in fiscal year 2022. Global demand for vehicles was on a level with the previous year. In a market that continued to be challenging, the Volkswagen Group delivered 8.3 million vehicles to customers.

DEVELOPMENTS IN THE GLOBAL ECONOMY

In the reporting period, the Russia-Ukraine conflict led to a humanitarian crisis and global market upheaval. Prices rose substantially, particularly on the energy and commodity markets. Parts supply shortages also intensified in this context. The Russia-Ukraine conflict led to increased uncertainty in respect of developments in the global economy and prompted large sections of the community of Western states to impose sanctions on Russia, ranging from extensive trade embargoes to the partial exclusion of Russia from the global financial system. Russia itself, in its role as an energy exporter, restricted gas deliveries to Europe. The resulting increase in energy prices and intensified supply shortages had a sustained impact on inflation in Europe particularly.

During 2022, the restrictive measures put in place to protect the population from the SARS-CoV-2 virus were lifted to a large extent in many countries. The progress made in administering vaccines to the public had a positive effect, while the emergence of the new Omicron variant and its subvariants led to a renewed sharp rise in infections on a national scale, mostly causing milder symptoms but increased rates of sick leave. In China particularly, local outbreaks of infection in the course of 2022 led to tight restrictions under the zero-Covid strategy being pursued there, resulting in economic constraints and disruption to international supply chains. The departure from this strategy led to a rapid increase in infection rates in China at the end of the year.

Following the slump in global economic output in 2020 and the incipient recovery due to baseline and catch-up effects in 2021, the global economy recorded positive overall growth of +3.0 (+6.0) % in 2022. Both the advanced economies and the emerging markets continued to recover on average, albeit with diminishing momentum and slower growth overall than in the prior year.

At national level, developments depended on the one hand on the scale of the negative impact of the Covid-19 pandemic and the intensity with which measures were taken to contain it, and on the other the extent to which national economies were affected by the consequences of the Russia-Ukraine conflict. In response to the further rise of inflation rates around the world, many countries shifted to a more restrictive monetary policy, which led central banks to increase their key interest rates and reduce bond purchases during the reporting period. The gloomier economic outlook resulted in large losses on major stock markets. On average, prices for energy and other commodities rose significantly in some cases year-on-year and shortages of certain intermediates and commodities remained high. Global trade in goods increased in 2022.

Europe/Other Markets

The economy in Western Europe recorded positive overall growth of +3.6 (+5.6) % in 2022. The reasons for this included increased economic resilience in the face of high infection rates in many countries, and the associated easing of the measures taken to contain the pandemic. However, significantly rising inflation rates, among other things, resulted in a slowdown in economic momentum. This trend was seen in almost all countries in Northern and Southern Europe.

At +0.7 (+6.4) %, the economies in Central and Eastern Europe recorded low real growth in absolute gross domestic product (GDP) overall in the reporting period. While economic output in Central Europe saw positive, albeit somewhat less dynamic growth of +4.4 (+7.8) %, GDP in the Eastern Europe region fell significantly compared with the prior year as a consequence of the Russia-Ukraine conflict, with a negative growth rate of −3.8 (+4.7) %. The sanctions imposed against Russia had a substantial impact in this region from March 2022 onwards, causing Russian economic output to contract from the second quarter. Russia saw a negative average growth rate for the year of −2.8 (+4.7) %. Inflation rates rose, in some cases sharply, across the entire Central and Eastern Europe region.

In Türkiye, economic output for the year 2022 as a whole rose by +5.1 (+11.6) % amid very high inflation and a fall in the value of the local currency. South Africa saw slight GDP growth of +2.2 (+4.9) % in the reporting period, amid persistent structural deficits and political challenges.

Germany

Germany’s economic output recorded a positive growth rate of +1.9 (+2.6) % in the 2022 reporting year, with declining momentum. The situation on the labor market improved compared with the previous year, with the unemployment rate and notices of Kurzarbeit (short-time working) for economic reasons falling on average. At the same time, monthly inflation rates reached the highest level in the history of the Federal Republic of Germany, while at the same time historic lows were registered in consumer confidence.

North America

US economic output grew by +2.1 (+5.9) % in the reporting period. Given rising inflation and the tight labor market, the US Federal Reserve consistently maintained its restrictive monetary policy and raised its key interest rate seven times over the course of the reporting year. Unemployment declined further in 2022 from the high level seen in the prior year. GDP rose by +3.6 (+5.0) % in neighboring Canada and by +3.1 (+4.9) % in Mexico.

South America

Brazil’s economy posted GDP growth of +2.9 (+5.3) % in 2022. Argentina registered a positive economic performance with year-on-year growth of +4.6 (+10.4) % amid very high inflation and continued depreciation of the local currency.

Asia-Pacific

At the beginning of the Covid-19 pandemic, China was exposed to the negative effects at an earlier stage than other economies and, due to the strict zero-Covid strategy pursued there, benefited from a relatively low number of new infections as the pandemic progressed. This strategy resulted in temporary local lockdowns in the reporting period in connection with the spread of the Omicron variant. The departure from this strategy led to a rapid increase in infection rates in China at the end of the year. The Chinese economy grew by only +3.0 (+8.5) % overall. India registered strong growth of +7.0 (+8.7) %. Japan recorded positive growth of +1.0 (+2.2) % year-on-year.