Group Management Report

What you'll find in this chapter:

Goals and Strategies

With its future program TOGETHER – Strategy 2025, the Volkswagen Group has launched the biggest change process in its history, laying the foundations for lasting success in tomorrow’s world of mobility and for its evolution into a globally leading provider of sustainable mobility.

Internal Management System and Key Performance Indicators

This chapter describes, on the basis of the Group strategy, how the Volkswagen Group is managed and the key performance indicators used for this purpose. In addition to financial measures, our management system also contains nonfinancial key performance indicators.

Structure and Business Activities

This chapter describes the legal and organizational structure of the Volkswagen Group and explains the material changes in 2016 with respect to equity investments.

Corporate Governance Report

Corporate governance is defined as responsible, transparent corporate management and supervision that aims to add long-term value. For us, good corporate governance not only forms the basis for lasting success; it is also an important prerequisite for strengthening the trust of our stakeholders in our work.

Remuneration Report

The Remuneration Report details the individualized remuneration of the Board of Management and the Supervisory Board of Volkswagen AG, broken down into components, as well as individualized pension provision disclosures for the members of the Board of Management. In addition, we explain in this chapter the main elements of the variable remuneration system for the Board of Management.

Executive Bodies

Members of the Board of Management and their Appointments.

Disclosures Required Under Takeover Law

In this section, we present the disclosures relating to takeover law required by sections 289(4) and 315(4) of the HGB.

Diesel Issue

We worked intensively to clarify the irregularities in emissions and provided effective technical solutions for the affected vehicles. Extensive settlement agreements were reached in the United States.

Business Development

The pace of global economic growth was slightly slower in 2016 than in the previous year. By contrast, global demand for vehicles was higher. Despite a persistently difficult environment, the Volkswagen Group delivered more than 10 million vehicles to customers.

Shares and Bonds

Volkswagen AG’s ordinary and preferred shares underperformed the market as a whole in 2016 in a volatile market environment.

Results of Operations, Financial Position and Net Assets

The Volkswagen Group’s sales revenue recorded further growth in fiscal year 2016. Despite further charges resulting from legal risks, especially in connection with the diesel issue, and restructuring measures, operating profit was up significantly on the previous year.

Summary

The Board of Management of Volkswagen AG considers business development and the economic position to have been satisfactory overall.

Volkswagen AG

Production and unit sales at prior-year level. Profit rises; further charges from the diesel issue, but at a lower level.

Sustainable Value Enhancement

Our goal is to run our business responsibly along the entire value chain. Everyone should benefit from this – our customers, our employees, the environment and society. Our future program TOGETHER – Strategy 2025 is ushering in the biggest change process in the Company’s history. The starting point is our vision of becoming one of the world’s leading providers of sustainable mobility.

Report on Expected Developments

Report on Risks and Opportunities

Promptly identifying the risks and opportunities arising from our operating activities and taking a forward-looking approach to managing them is crucial to our Company’s long-term success. A comprehensive risk management and internal control system helps the Volkswagen Group deal with risks in a responsible manner.

Prospects for 2017

The Volkswagen Group’s Board of Management expects the global economy to record slightly higher growth in 2017 than in the previous year.

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