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Key events

Diesel issue

On September 18, 2015, the US Environmental Protection Agency (EPA) publicly announced in a “Notice of Violation” that irregularities in relation to nitrogen oxide (NOx) emissions had been discovered in emissions tests on certain Volkswagen Group vehicles with 2.0 l diesel engines in the USA. In this context, Volkswagen AG announced that noticeable discrepancies between the figures recorded in testing and those measured in actual road use had been identified in type EA 189 diesel engines and that this engine type had been installed in roughly eleven million vehicles worldwide. On November 2, 2015, the EPA issued a “Notice of Violation” alleging that irregularities had also been discovered in the software installed in US vehicles with type V6 3.0 l diesel engines.

The so-called diesel issue is rooted in a modification of parts of the software of the relevant engine control units – which, according to Volkswagen AG’s legal position, is only unlawful under US law – for the type EA 189 diesel engines that Volkswagen AG was developing at that time. This software function was developed and implemented from 2006 on without knowledge at the level of the Board of Management. Members of the Board of Management did not learn of the development and implementation of this software function until the summer of 2015.

There are furthermore no findings that, following the publication in May 2014 of the study by the International Council on Clean Transportation, an unlawful “defeat device” under US law was disclosed to the persons responsible for preparing the 2014 annual and consolidated financial statements as the cause of the high NOx emissions in certain US vehicles with 2.0 l type EA 189 diesel engines. Rather, at the time the 2014 annual and consolidated financial statements were being prepared, the persons responsible for preparing these financial statements remained under the impression that the issue could be resolved with comparatively little expense.

In the course of the summer of 2015, however, it became progressively apparent to individual members of Volkswagen AG’s Board of Management that the cause of the discrepancies in the USA was a modification of parts of the software of the engine control unit that was later identified as an unlawful “defeat device” as defined by US law. This culminated in Volkswagen’s disclosure of a “defeat device” to the EPA and the California Air Resources Board (CARB), a department of the Environmental Protection Agency of the State of California, on September 3, 2015. According to the assessment at the time by the responsible persons dealing with the matter, the magnitude of the costs expected to result for the Volkswagen Group (recall costs, retrofitting costs, and financial penalties) was not fundamentally dissimilar to that in previous cases involving other vehicle manufacturers. It therefore appeared to be manageable overall considering the business activities of the Volkswagen Group. This assessment by Volkswagen AG was based, among other things, on the advice of a law firm engaged in the USA for regulatory approval issues, according to which similar cases had in the past been amicably resolved with the US authorities. The EPA’s publication of the “Notice of Violation” on September 18, 2015, which the Board of Management had not expected, especially at that time, then presented the situation in an entirely different light.

In fiscal year 2022, special items in connection with the diesel issue amounted to €399.1 million (previous year: €750.8 million); they were mainly recognized in the other operating result. These special items were attributable to additional expenses primarily for legal risks.

Further information on the litigation in connection with the diesel issue can be found in the “Litigation” section.

Antitrust investigations

In 2011, the European Commission conducted searches at European truck manufacturers for suspected unlawful exchange of information during the period from 1997 to 2011; in November 2014, the Commission issued a statement of objections to MAN, Scania, and the other truck manufacturers concerned. In its settlement decision of July 2016, the European Commission assessed fines against five European truck manufacturers. MAN’s fine was waived in full as the company had informed the European Commission about the irregularities as a key witness. In September 2017, the European Commission fined Scania €0.88 billion. Scania appealed to the European Court of Justice in Luxembourg and mounted a comprehensive defense. In a judgment rendered in February 2022, the European General Court (Court of First Instance) rejected in its entirety the appeal filed by Scania in this connection. Scania appealed this judgment to the European Court of Justice in April 2022. Scania had already recognized a provision of €0.4 billion in 2016 and increased this provision to approximately €0.9 billion in 2021.

Furthermore, antitrust lawsuits seeking damages have been received from customers. As is the case in any antitrust proceedings, this may result in further lawsuits for damages. No provisions have been recognized or contingent liabilities disclosed for these cases as most of them are still in an early stage and currently cannot be assessed for this reason. In other cases, the chance of a decision by a court of last resort awarding antitrust damages against MAN or Scania currently appears remote.

In July 2021, the European Commission assessed a fine totaling roughly €502 million against Volkswagen AG, AUDI AG, and Dr. Ing. h.c. F. Porsche AG pursuant to a settlement decision. This amount was recognized under other operating expenses in the previous year. Volkswagen declined to file an appeal, hence the decision became final in 2021. The subject matter scope of the decision is limited to the cooperation of German automobile manufacturers on individual technical questions in connection with the development and introduction of SCR (selective catalytic reduction) systems for passenger cars that were sold in the European Economic Area. The manufacturers are not charged with any other misconduct such as price fixing or allocating markets and customers.

The Korean competition authority KFTC is analyzing potential violations based on the facts of the EU case. The final report of the appointed KFTC case handler was issued in November 2021. Volkswagen, Audi, and Porsche have replied to this report. In February 2023, the KFTC published a press release stating that an administrative fine decision would be issued against four automobile manufacturers in the SCR context. According to the press release, no fine is to be imposed on Volkswagen AG and the decision would not affect Porsche AG. However, an administrative fine decision would be issued against AUDI AG in the SCR matter. The competition authority’s final decision and the grounds thereof have not yet been served; service is currently expected in the first half of 2023. The Turkish competition authorities, who investigated similar matters, issued a final decision in January 2022 in which they determined anticompetitive behavior to allegedly exist, but found that it had no effect on Türkiye, for which reason they refrained from imposing fines on the German automakers. Volkswagen, Audi, and Porsche are currently considering whether to file an appeal. Based on comparable matters, the Chinese competition authority has instituted proceedings against Volkswagen, Audi, and Porsche, among others, and issued requests for information.

Russia-Ukraine conflict / Covid-19 pandemic / semiconductor shortages

The start of the Russia-Ukraine conflict in February 2022 led not only to a humanitarian crisis but also brought market upheaval around the world. There have been substantial price rises, particularly on the energy and commodity markets, and significant increases in interest and inflation rates have been observed internationally.

In addition, the parts supply shortages intensified in this context directly after the start of the conflict. In the Volkswagen Group, this particularly affected the supply of cable harnesses from Ukraine. Volkswagen took immediate action to clear these supply bottlenecks from Ukraine, with the result that there are no material bottlenecks in this regard at present.

Moreover, different sanctions have been imposed on Russia as a result of the conflict, especially by the EU and the USA. They restrict economic transactions with Russia and have an impact on the Russian companies and plants of the Volkswagen Group and on sales of vehicles to Russia. The sanctions also affect the new financial services business in Russia and lead to impairment risks to existing lease assets and financial receivables. Against the backdrop of the Russia-Ukraine conflict and the resulting consequences, Volkswagen has decided to suspend vehicle production in Russia until further notice. Vehicle exports to Russia have also been halted. In addition, the respective sanction requirements are also being complied with in relation to parts supplies and the provision of technical information. In addition, Russia itself, in its role as an energy exporter, has restricted gas deliveries to Europe. The resulting increase in commodity prices and intensified supply shortages are reinforcing the threat of persistently high inflation.

Russia’s partial mobilization on September 21, 2022 and the ensuing tightening of sanctions led to adjustments to the risk assessment in relation to the situation in Russia in the third quarter and to the potential future development of the Group’s business activities in Russia.

Since there was no noticeable easing in the Russia-Ukraine conflict in the fourth quarter, the discontinuation of business activities in Russia took concrete shape in the Volkswagen Group. In this context, some companies were sold already and further sale negotiations were initiated (see the “IFRS 5 – Noncurrent assets held for sale” section). Overall, comprehensive impairment losses on assets of production facilities and financial services companies as well as risk provisions, especially for third-party expenses expected from the discontinuation of activities in Russia, were recognized in the fiscal year.

Overall, total expenses of around €2 billion were recognized in the fiscal year as a direct result of the Russia-Ukraine conflict, which are reported in cost of sales and in the other operating result. Of this amount, €1.5 billion was attributable to the Automotive Division and €0.5 billion to the Financial Services Division.

In connection with inflation rate trends, the weighted average cost of capital (WACC) used in testing the different cash-generating units for impairment were also subject to significant change. Please refer to the “Accounting policies” section.  

In addition, as a result of the turbulence on the commodity and capital markets, gains totaling €3.7 billion had to be recognized in the other operating result, primarily from the fair value measurement and realization of derivatives to which hedge accounting is not applied (especially commodity, currency and interest rate hedges).

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.

In addition to the uncertainty and measures being taken around the world to deal with the Covid-19 pandemic, persistent semiconductor shortages and the resulting limited availability of Group models meant that demand could not be adequately met in some regions.

Please also refer to the comments in the 2022 group management report, specifically in the chapters entitled Business Development, Results of Operations, Financial Position and Net Assets, Report on Expected Developments and Report on Risks and Opportunities.

Material transactions of the current fiscal year

IPO of Porsche AG

On September 28, 2022, as part of the IPO of Dr. Ing. h.c. F. Porsche AG, Stuttgart (Porsche AG), a total of 113,875,000 preferred shares of Porsche AG were successfully placed with investors at a placement price of €82.50 per preferred share, totaling around €9.4 billion – including 14,853,260 preferred shares to cover potential additional allocations. The non-voting no-par value bearer shares came from the portfolio of Porsche Holding Stuttgart GmbH, Stuttgart – a wholly owned subsidiary of Volkswagen AG. The total number of preferred shares offered in the IPO corresponded to up to 25% of the preference share capital of Porsche AG (including additional allocations). The non-voting preferred shares of Porsche AG have been traded on the Regulated Market of the Frankfurt Stock Exchange since September 29, 2022. Up to the early termination of the stabilization period on October 11, 2022, a total of 3,794,199 preferred shares had been bought back on the market. The free float of the preferred shares after the end of the stabilization period is therefore 24.2% and comprises 110,080,801 preferred shares.

In connection with the IPO, Volkswagen additionally sold an interest of 25% of Porsche AG’s ordinary shares plus one ordinary share to Porsche Automobil Holding SE, Stuttgart (Porsche SE). As consideration, Porsche SE has undertaken to pay a purchase price of around €10.1 billion to Volkswagen; this purchase price includes a premium of 7.5% on the placement price of the preferred shares per share. The purchase of the ordinary shares will be completed in two tranches of 79,712,501 and 34,162,500 shares respectively.

As a result of the transactions, the Volkswagen Group’s equity increased by €19.1 billion, net of bank commissions and fees of €0.1 billion taken directly to equity; of this amount, €10.8 billion is reported as noncontrolling interests. The cash inflow for the preferred shares and the first tranche of the ordinary shares occurred at the beginning of the fourth quarter of 2022.

The resolution of the extraordinary General Meeting of Volkswagen AG on December 16, 2022 gave rise to the obligation to pay a dividend, which was increased by €19.06 per ordinary and preferred share (“special dividend”) and led to a total obligation to the shareholders of Volkswagen AG amounting to €9.6 billion. Taking into account the offsetting transaction described below, a corresponding liability was recognized for this payment as of the balance sheet date. The cash outflow was slated for January 9, 2023 and occurred on that day.

Volkswagen AG and Porsche SE agreed to offset the obligation to pay a special dividend to Porsche SE against Volkswagen AG’s claim to the payment of the purchase price still outstanding for the second tranche of ordinary shares. In the consolidated financial statements as of December 31, 2022, the purchase price receivable of €3.0 billion for the second tranche and the dividend liability of €3.1 billion were therefore presented on a net basis. Upon payment of the special dividend on January 9, 2023, the netting process was completed.

The employees of Volkswagen AG and Volkswagen Sachsen GmbH are to participate in the economic success of the placement of the preferred shares and the sale of ordinary shares in Porsche AG by way of a one-off payment of up to €2,000 per employee. A liability of €0.3 billion was recognized to this end as of the balance sheet date. On October 17, 2022, the Board of Management and the Works Council of Porsche AG communicated a special payment to employees to mark the successful IPO; the payment of €0.2 billion was made and recognized in profit or loss in the fourth quarter of 2022.

The total bonus for employees in connection with the IPO of Porsche AG amounted to €0.5 billion in the Volkswagen Group as of the balance sheet date.

Acquisition of Europcar

In 2021, together with investment firm Attestor Limited and Pon Holdings B.V., Volkswagen made a joint public takeover offer for the shares of Europcar Mobility Group S.A., Paris/France (Europcar) through the consortium company Green Mobility Holding S.A. (GMH) based in Strassen/Luxembourg. The European Commission issued final antitrust approval at the end of May 2022. During the extended offer period, the French Financial Markets Authority gave Europcar shareholders the opportunity to tender their shares to the consortium company. In total, 93.6% of Europcar’s shareholders accepted the offer. The consortium jointly assumed control of Europcar in mid-June 2022. Because the acceptance rate was over 90%, a squeeze-out was initiated for the remaining Europcar shares in July 2022, and the company was delisted. Since July 13, 2022, the consortium company has held 100% of the shares in Europcar. The purchase price was 51 cents per Europcar share.

At the end of June 2022, the entire portion of the purchase price attributable to Volkswagen, amounting to €1.7 billion, was contributed to GMH. Since joint control has been contractually agreed, the company, in which Volkswagen holds 66% of the shares, will be accounted for using the equity method in the Volkswagen consolidated financial statements. In addition, Volkswagen is the writer of put options held by the other members of the consortium, and the other members have granted Volkswagen call options on their shares in the consortium company. The long-term extension of the Attestor options was arranged in December 2022. The measurement of the options led to a total non-cash expense of €325 million in fiscal year 2022, which was recognized in the financial result.

The completion of the Europcar transaction marks another important milestone for Volkswagen in the Group’s Mobility Solutions initiative under the NEW AUTO strategy. With this transaction, the Volkswagen Group intends to secure a significant share of the global market for mobility services. Europcar Mobility Group is to become one of the cornerstones of the mobility platform planned by Volkswagen.

Argo AI

In the third quarter of 2022, Volkswagen made the strategic decision to not further invest in Argo AI, LLC, Pittsburgh/USA (Argo AI) for the development of autonomous driving. As Argo AI was previously unable to attract new investors, the investment was fully written down in the absence of expected returns. This resulted in an expense of €1.9 billion in fiscal year 2022, which is reported in other financial result. It is planned that Argo AI will be wound down. For this purpose, Volkswagen provided Argo AI with USD50 million in January 2023. In addition, Volkswagen is in negotiations to acquire Argo AI personnel and assets.

Material transactions of the previous fiscal year

Merger of MAN SE with TRATON SE

The merger of MAN SE with TRATON SE was adopted by resolution of the Annual General Meeting of MAN SE on June 29, 2021. The merger resolution also triggered the process to transfer the shares held by the noncontrolling interest shareholders of MAN SE to TRATON SE against payment of an appropriate cash settlement (merger squeeze-out). In this context, the present value of the put options granted, amounting to approximately €587 million, was recognized as a current liability directly in equity. The noncontrolling interests in the Volkswagen Group’s equity declined accordingly, as did the retained earnings and other reserves attributable to the shareholders of Volkswagen AG.

The merger of MAN SE with TRATON SE was entered in the commercial register for MAN SE and TRATON SE on August 31, 2021. The squeeze-out took legal effect on the date of this entry in the commercial register. This was followed on September 3, 2021 by the disbursement of the cash settlement of €70.68 per ordinary and preferred share to the noncontrolling interest shareholders of MAN SE, thus completing the MAN SE squeeze-out. Judicial award proceedings initiated by noncontrolling interest shareholders who had received a settlement as a result of the squeeze-out were conducted to review whether the cash settlement is appropriate.

Investment in Northvolt AB

In mid-June 2021, Volkswagen and the Swedish battery cell producer Northvolt AB, Stockholm/Sweden (Northvolt AB) had agreed to concentrate production of Volkswagen premium cells in Skellefteå/Sweden. In connection with this, Volkswagen had participated in a financing round at Northvolt AB that was proportionate to its shareholding, investing a further USD650 million in the company. Volkswagen had also increased its existing convertible loan by a further €190 million and, at the same time, converted this part of the loan to preferred shares. This increased Volkswagen’s ownership interest in Northvolt AB to 23.6%. Due to favorable terms and conditions on conversion, the measurement of the converted loan had resulted in non-cash income of €62 million in the previous year. As a result, the carrying amount of the equity investment in Northvolt AB rose by €796 million. A convertible loan of €240 million remains on issue.

Establishment of Bugatti Rimac d.o.o.

In 2021, the Volkswagen Group and Rimac Automobili d.o.o., Sveta Nedelja/Croatia (Rimac), established Bugatti Rimac d.o.o., which has its headquarter in Sveta Nedelja. Volkswagen had contributed its consolidated subsidiaries Bugatti Automobiles S.A.S, Molsheim/France and an initial 51% of Bugatti International S.A., Strassen/Luxembourg. After proportional profit elimination, the contribution had resulted in a non-cash gain of €124 million in the previous year, which was recognized in the other operating result. Rimac holds 55% of the shares in the company and Volkswagen holds 45% through Porsche AG. In addition, Porsche AG holds a direct interest of 22% in Rimac. In the consolidated financial statements, both equity investments are reported under equity-accounted investments.

Initially, Bugatti Rimac d.o.o. will produce two hypercar models, the Bugatti Chiron and the Rimac Nevera. It is envisaged that further in the future the activities of Bugatti Rimac d.o.o. will focus on a joint product portfolio under the Bugatti brand name with the aim of developing, producing and selling electric-powered, luxury hyper sports cars.

Equity investment in Gotion High-Tech Co., Ltd.

To expand its battery expertise, Volkswagen acquired an interest in Gotion High-Tech Co., Ltd., Hefei/China (Gotion) through Volkswagen (China) Investment Co. Ltd. in 2021, and is therefore the largest shareholder of the Chinese battery supplier. The Group spent a total of €1.2 billion on this transaction in the previous year. The investment is accounted for using the equity method.

Acquisition of Navistar

On July 1, 2021, a TRATON GROUP company acquired all of the outstanding shares in Navistar International Corporation (Navistar), a US manufacturer of commercial vehicles based in Lisle, Illinois/USA. The purchase price of €3,118 million (USD3,700 million) was paid in cash. TRATON SE indirectly holds 100% of the shares in Navistar International Corporation, which until June 30, 2021 was accounted for using the equity method (interest of 16.7%). Trading in Navistar shares on the New York Stock Exchange has been discontinued.

The goodwill in the amount of €2,783 million from the acquisition determined as of December 31, 2021 reflected the synergies arising from the operation with Navistar. These relate particularly to the growth in the share of the market, to procurement, production costs, modularization and the use of shared components, and to the area of research and development.

The fair value of the equity interest in Navistar that TRATON GROUP had held immediately prior to the acquisition date was determined on the basis of the share price of USD44.50/share at the acquisition date; it amounted to €624 million. The remeasurement of this equity interest resulted in a gain of €219 million in 2021. Moreover, the derecognition of the equity-accounted investment during the initial consolidation of Navistar resulted in income and expenses previously recognized directly in equity being reclassified to the income statement, which had led to an expense of €37 million in the previous year. This resulted in a total gain of €182 million in the previous year which was presented in the share of the result of equity-accounted investments. The resulting preliminary allocation of the purchase price to the assets acquired and liabilities assumed in the previous year was as follows:

€ million


Preliminary fair values as of July 1, 2021




Consideration transferred






Unwinding of pre-existing relationships



Exchange of share-based payment awards






€ million


Preliminary fair values as of  July 1, 2021




Net assets acquired



Intangible assets



of which Customer relationships



of which Brand names



Property, plant and equipment



Lease assets



Other equity investments



Noncurrent receivables and financial assets






Current receivables and financial assets



Cash funds



Deferred tax assets



Total assets






Noncurrent financial liabilities



Provisions for pensions and similar obligations



Deferred tax liabilities



Other noncurrent liabilities and provisions



Current financial liabilities



Other current liabilities and provisions



Total liabilities



Balance of net assets acquired



€ million


Preliminary goodwill calculation




Consideration transferred



Equity interests



Fair value of equity interests held previously






Net assets acquired






In 2021, the consideration transferred included an amount of €126 million for winding down pre-existing relationships. This corresponded to the fair value of the Volkswagen Group’s receivables from and liabilities to Navistar recognized as of the acquisition date. The fair value of an amount receivable by MAN Truck & Bus from Navistar arising from the termination of a development project exceeded the previously recognized carrying amount by €12 million. The difference was recognized through profit or loss in other operating income in 2021.

Receivables and financial assets included the following groups of receivables for which the gross amounts differed from the fair values in 2021:

€ million


Gross amount


Amount expected to be uncollectible






Financing business receivables





Lease receivables





Trade receivables





Other receivables





The transaction costs of €34 million incurred up to December 31, 2021 for implementing the business combination were recognized in administrative expenses.

As a result of the consolidation of Navistar as of July 1, 2021, the Volkswagen Group’s sales revenue increased by €3,494 million as of December 31, 2021, while earnings after tax, including amortization on realized hidden reserves, decreased by €217 million.

If Navistar had been included in the consolidated financial statements of the Volkswagen Group as a fully consolidated subsidiary since January 1, 2021, consolidated sales revenue after consolidation reported as of December 31, 2021 would have amounted to €253,802 million, and profit after tax would have been €526 million lower, at €14,942 million.

Due to the size of the transaction, it was not possible to complete the internal reviews of the information underlying the purchase price allocation until fiscal year 2022. The update to the purchase price allocation did not materially affect the Volkswagen Group’s net assets, financial position and results of operations.