Investments

CONSOLIDATED SUBSIDIARIES

The fiscal year’s changes in the consolidated Group are shown in the following table:

The initial consolidation or deconsolidation of these subsidiaries, either individually or collectively, did not have a significant effect on the presentation of the net assets, financial position and results of operations. The unconsolidated structured entities are immaterial from a Group perspective. In particular, they do not give rise to any significant risks to the Group.

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates QuantumScape Corporation, San José/United States (QuantumScape), Northvolt AB and Gotion, with activities in the battery business field, and the other associates Sinotruk (Hong Kong) Ltd., Hongkong/China (Sinotruk), Bertrandt AG, Ehningen/Germany (Bertrandt), and There Holding B.V., Rijswijk/the Netherlands (There Holding), were material as of the balance sheet date.

QuantumScape

QuantumScape is a US-based start-up for lithium-metal solid state batteries. A strategic partnership has been set up between Group companies and QuantumScape for the joint production of battery cells in the future. QuantumScape’s principal place of business is in San José/United States.

As of December 31, 2022, the quoted market price of the shares in QuantumScape amounted to €453 million (previous year: €1,682 million).

Gotion

Gotion is a Chinese technology company that engages primarily in research and development, production and sales of lithium-ion batteries and in electric transmission and transformation businesses. Group companies and Gotion have agreed a strategic framework for cooperation in the development, manufacture and distribution of battery cells. Gotion’s principal place of business is in Hefei/China.

As of December 31, 2022, the quoted market price of the shares in Gotion amounted to €1.8 billion (previous year: €3.1 billion).

Northvolt AB

Northvolt AB develops and produces lithium-ion batteries. Battery purchase agreements are in place between Group companies and Northvolt AB. Northvolt AB’s principal place of business is in Stockholm/Sweden.

Sinotruk

Sinotruk is one of the largest truck manufacturers in the Chinese market. There is an agreement in place between Group companies and Sinotruk regarding a long-term strategic partnership, under which the Group participates in the local market. Sinotruk’s principal place of business is in Hongkong/China.

As of December 31, 2022, the quoted market price of the shares in Sinotruk amounted to €903 million (previous year: €938 million).

Bertrandt

Bertrandt is an engineering partner to companies in the automotive and aviation industry. Its portfolio of services ranges from developing individual components through complex modules to end-to-end solutions. Bertrandt’s principal place of business is in Ehningen/Germany.

As of December 31, 2022, the quoted market price of the shares in Bertrandt amounted to €118 million (previous year: €168 million).

There Holding

Together with the BMW Group, Mercedes-Benz Group (formerly: Daimler AG) and other companies, Volkswagen holds an equity investment in There Holding B.V., Rijswijk/the Netherlands, an investment company. In turn, There Holding B.V. held around 60% of the shares of HERE International B.V., Eindhoven/the Netherlands, as of the end of fiscal year 2022. HERE International B.V. is one of the world’s largest producers of digital road maps for navigation systems. Since the interest held does not grant control in accordance with IFRS 10, HERE International B.V. is included in the financial statements of There Holding B.V. as an associate using the equity method.

The change in the carrying amounts shown above results mainly from the separate presentation of the companies with activities in the battery business field in fiscal year 2022.

There were unrecognized losses of €2 million (previous year: €7 million) relating to investments in associates. Financial guarantees have been issued to associates in an amount of €1 million (previous year: €– million).

INTERESTS IN JOINT VENTURES

From a Group perspective, the joint ventures FAW-Volkswagen Automotive Company Ltd., Changchun/China, SAIC-Volkswagen Automotive Company Ltd., Shanghai/China, and SAIC-Volkswagen Sales Company Ltd., Shanghai/China, were material at the reporting date due to their size.

FAW-Volkswagen Automotive Company

FAW-Volkswagen Automotive Company develops, produces and sells passenger cars. There is an agreement in place between Group companies and the joint venture partner China FAW Corporation Limited regarding a long-term strategic partnership. The principal place of business is in Changchun/China.

SAIC-Volkswagen Automotive Company

SAIC-Volkswagen Automotive Company develops and produces passenger cars. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai/China.

SAIC-Volkswagen Sales Company

SAIC-Volkswagen Sales Company sells passenger cars for SAIC-Volkswagen Automotive Company. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai/China.

The carrying amount includes the equity investment in GMH. An impairment loss on the entire investment in Argo AI included in this item in the previous year was recognized in the fiscal year. For further details, see the “Key events” section.

There were no unrecognized losses relating to investments in joint ventures in the fiscal year (previous year: €2 million). Contingent liabilities to joint ventures amounted to €236 million (previous year: €239 million), while financial guarantees stood at €70 million (previous year: €70 million). Cash funds of joint ventures amounting to €172 million (previous year: €185 million) are deposited as collateral for asset-backed securities transactions and are therefore not freely available.

IFRS 5 – NONCURRENT ASSETS HELD FOR SALE

Assets and disposal groups held for sale of the current fiscal year

In December, Porsche AG entered into an agreement with an independent, non-Group investor for the sale of two Russian sales companies in the Passenger Cars and Light Commercial Vehicles segment, OOO Porsche Russland, Moscow/Russia, and OOO Porsche Center Moscow, Moscow/Russia, as well as one company assigned to the Financial Services segment, OOO Porsche Financial Services Russland, Moscow/Russia. Moreover, a repurchase option was agreed with this investor, which can be exercised at the earliest five years and at the latest ten years after the sale. As of the reporting date, the legal transfer of ownership of the Russian subsidiaries of Porsche AG was still subject to approval by the Russian authorities. It is currently expected that ownership will be legally transferred and the purchase price finally determined in the course of the first quarter of 2023. An impairment loss of €25 million was determined for the disposal group and charged to other operating expenses.

It was resolved in the fourth quarter of 2022 to sell the following fully consolidated subsidiaries allocated to the Financial Services segment: OOO Volkswagen Bank RUS, Moscow/Russia, OOO Volkswagen Group Finanz, Moscow/Russia, and OOO Volkswagen Financial Services RUS, Moscow/Russia. The resolution by the competent governing body was immediately followed by the implementation of a disposal plan, which is expected to be completed in the first half of 2023. Impairment losses resulting from measurement requirements under IFRS 5 were not recognized for the disposal groups since the carrying amounts recognized had already been determined under increased macroeconomic uncertainty and it was not considered likely that the implementation of the disposal plan would lead to further impairment losses.

On December 15, 2022, the Supervisory Board of Volkswagen AG resolved to sell the MAN ES gas turbine business of MAN Energy Solutions SE, Augsburg, and MAN Energy Solutions Schweiz AG, Zurich/Switzerland, by way of an asset deal to CSIC Longjiang GH Gas Turbine Co. Ltd., Harbin/China, and its subsidiaries, which are still to be established under German and Swiss law. The transaction is expected to be completed within the next 12 months.

In accordance with IFRS 5, the assets and liabilities held for sale were recognized at the lower of their carrying amount and fair value less expected costs of disposal.

The main groups of assets and liabilities classified as held for sale in the Volkswagen Group as of December 31, 2022, are shown below:

The cumulative income and expenses in connection with the disposal groups held for sale are recognized in other comprehensive income; they amount to € −178 million.

Transactions completed in the current fiscal year

TRATON GROUP has signed a declaration of intent in the third quarter of 2022 under which 100% of the shares in OOO Scania-Rus, Moscow, Golitsino/Russia (OOO Scania-Rus), are to be sold. OOO Scania-Rus was consequently classified as a disposal group held for sale as to September 30, 2022. The sale was completed on December 14, 2022 at a purchase price of €75 million.

The sale led to the recognition of an expense of €102 million. With the exception of cash and cash equivalents and other receivables, an impairment loss was recognized on all assets of OOO Scania-Rus. Of the total expense, an amount of €56 million was attributable to other operating expenses and €3 million to the tax result.

In addition, negative accumulated other comprehensive income of €43 million was attributable to OOO Scania-Rus; it relates to currency translation effects and was reclassified to other operating expenses at the time of the sale. The sale of the shares resulted in a net cash outflow of €11 million.

Furthermore, TRATON GROUP entered into an agreement with a Russian supplier in the third quarter of 2022 for the sale of 100% of the shares of OOO MAN Truck and Bus RUS, Moscow/Russia. For this reason, the company was presented as a disposal group held for sale as of September 30, 2022.

The sale was completed effective December 2, 2022 at a selling price of €5 million. The transaction includes an option for the TRATON GROUP to repurchase the shares of the company sold, which can be exercised in the period from January 1, 2024 to July 31, 2037. The sale led to the recognition of an expense of €97 million. With the exception of cash and cash equivalents, an impairment loss was recognized on all assets. An additional provision of €43 millon was recognized separately from the disposal group and subsequently derecognized as part of the deconsolidation. Of the total impairment loss, an amount of €74 million was attributable to other operating expenses and €5 million to the tax result.

In addition, negative accumulated other comprehensive income of €18 million was attributable to OOO MAN Truck and Bus RUS; it relates to currency translation effects and was likewise reclassified to other operating expenses at the time of the sale. The sale of the shares resulted in a net cash outflow of €59 million.

In April 2022, TRATON GROUP entered into a definitive agreement with Tupy S.A., Brazil for the sale of International Indústria Automotiva Da América Do Sul Ltda (MWM). MWM specializes in the manufacture of diesel engines. Based on this, MWM was presented as a disposal group held for sale as of June 30, 2022.

The sale of MWM was completed on November 30, 2022. The selling price is €224 million, of which €158 million has already been settled. The amount in excess is reported under other financial assets; €52 million of this amount is attributable to purchase price adjustments relating to the closing balance sheet of MWM and €14 million to contingent consideration. A gain of €7 million was recognized in connection with the sale. This included impairment losses of €2 million, which are disclosed under other operating expenses. In addition, positive accumulated other comprehensive income of €9 million was attributable to MWM; it relates to currency translation effects and was reclassified to other operating expenses at the time of the sale. The sale of the shares in MWM resulted in a net cash inflow of €113 million.

On March 26, 2021, Brose Fahrzeugteile SE & Co. Kommanditgesellschaft (Brose) and VW Finance Luxemburg S.A., a subsidiary of Volkswagen AG, entered into an agreement to establish a jointly operated company for the development and manufacture of complete seat units, seat structures and components, and solutions for the vehicle interior. As part of this arrangement, Brose acquired half of the shares of the Volkswagen Group company SITECH Sp. z o.o., Polkowice/Poland. Brose and Volkswagen each hold 50% of the jointly operated company, Brose Sitech Sp. z o.o., Polkowice/Poland (Brose Sitech), but Brose takes the industrial lead. Consequently, Brose controls the jointly operated company and Volkswagen, given its significant influence following the transaction, accounts for the company as an associate using the equity method.

In accordance with IFRS 5, SITECH Sp. z o.o., Polkowice/Poland, and its consolidated subsidiaries SITECH Sitztechnik GmbH, Wolfsburg, and SITECH Dongchang Automotive Seating Technology Limited, Shanghai/China, were classified as a disposal group held for sale as of December 31, 2021, which was recognized at its carrying amount.

Once all closing conditions had been met, the transaction was completed on January 1, 2022.