Results of Operations, Financial Position and Net Assets

Fiscal year 2024 was dominated by increasingly intense competition in the automotive industry. In this challenging market environment, the Volkswagen Group generated sales revenue on a level with the prior year. A decline in the operating result was due primarily to restructuring measures.

The Volkswagen Group’s segment reporting comprises the four reportable segments of Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering and Financial Services, in compliance with IFRS 8 and in line with the Group’s internal financial management and reporting structures.

The reconciliation covers activities and other operations that do not, by definition, constitute segments. These include the unallocated Group financing activities. Consolidation adjustments between the segments (including the holding company functions) are also contained in the reconciliation. The purchase price allocations for Porsche Holding Salzburg and Porsche, Scania, MAN and International (formerly Navistar) are made to their corresponding segments.

The Automotive Division comprises the Passenger Cars and Light Commercial Vehicles segment, the Commercial Vehicles segment and the Power Engineering segment, as well as the figures from the reconciliation. The Passenger Cars and Light Commercial Vehicles segment is combined with the reconciliation to form the Passenger Cars Business Area, while the Commercial Vehicles and Power Engineering segments are identical to the business areas of the same name. The Financial Services Division corresponds to the Financial Services segment.

At Volkswagen, segment profit or loss is measured on the basis of the operating result.

PRIOR-YEAR CORRECTIONS IN ACCORDANCE WITH IAS 8

It was found during the reporting year that obligations related to the granting of fringe benefits had not been included in full when calculating the provision for time assets. The error was corrected in accordance with IAS 8 by adjusting the affected items accordingly in the consolidated financial statements for the prior years.

The retrospective correction resulted in a change in equity as of December 31, 2023/January 1, 2024 and January 1, 2023, respectively. This is attributable to the increase in other provisions and the recognition of deferred tax assets. The recognition of the additional fringe benefits did not have a material impact on the income statement, the statement of comprehensive income, or the cash flow statement. The prior-year figures have been adjusted accordingly.

RESTRUCTURING MEASURES IN THE VOLKSWAGEN GROUP

In fiscal year 2024, the Volkswagen Group recognized restructuring costs of €3.0 billion, mostly in other operating result. They are primarily attributable to Volkswagen AG and the Audi Group.

To bring about a long-term reduction in personnel costs in the administrative areas of Volkswagen AG, the Board of Management resolved in April 2024 to support the downsizing activities by offering selective severance agreements. Expenses of €0.9 billion were recognized for this.

Against the backdrop of trends in demand for the Audi Q8 e-tron model family, which is manufactured in Brussels, the Board of Management of Audi Brussels S.A./N.V., Brussels/Belgium (Audi Brussels), conducted an information and consultation process with the competent social partners under Belgian law for the restructuring of the site from July to December 2024. The process plans to discontinue the operations as of February 28, 2025. A social plan was approved in January 2025. Expenses totaling €1.6 billion were recognized in fiscal year 2024 in connection with this restructuring. They include, among other items, anticipated amortization and depreciation charges on inventories and non-current assets, expenses from a change in the production process, legal and consulting costs, as well as employee-related expenses for the social plan.

Furthermore, restructuring programs were also introduced in other Group companies.

EFFECTS OF THE COLLECTIVE BARGAINING AGREEMENT

On the basis of the collective bargaining agreement entered into between Volkswagen AG and the employee representatives in December 2024, it was necessary to adjust the calculation of various personnel-related provisions. This resulted in income of around €1 billion, which is largely presented in cost of sales. In addition, various assumptions about expected developments had to be adjusted when measuring pension obligations. This resulted in an actuarial gain of €0.2 billion, which was recognized in equity.

COOPERATION WITH RIVIAN

Volkswagen Group (Volkswagen) and US electric vehicle manufacturer Rivian Automotive, Inc., Irvine/USA (Rivian), announced their intention to establish a joint venture in June 2024. After reaching technical milestones and obtaining the necessary official approvals, Rivian and VW Group Technology, LLC, Palo Alto/USA (Rivian and Volkswagen Group Technologies) commenced activities on November 13, 2024. The two partners hold equal shares in the joint venture, which functions as an independent company. It is included in the consolidated financial statements as a joint venture using the equity method.

The aim of the partnership is to develop next generation software-defined vehicle (SDV) architectures to be used in future vehicles of both companies. The joint venture builds on Rivian’s software and electronic architecture to facilitate the joint development of best-in-class architectures and software for the SDVs of both partners.

Volkswagen is planning to invest up to USD 5.8 billion in Rivian and the Rivian and Volkswagen Group Technologies joint venture by no later than January 2028. An initial investment in Rivian was made in June 2024, taking the form of an unsecured convertible note of USD 1 billion, which was converted into 95,377,269 ordinary shares of Rivian on December 3, 2024. Volkswagen thus holds around 8.6% of the outstanding class A shares of Rivian, representing a share of around 8% of the voting rights. The investment in Rivian is measured at fair value through other comprehensive income in the consolidated financial statements. When Rivian and Volkswagen Group Technologies commenced operations, Volkswagen invested a further USD 1.3 billion, in particular for the acquisition of the licenses in Rivian’s existing architecture technology and for the 50% share of the joint venture. When certain financial and technical milestones are reached in 2025, 2026 and 2027, Volkswagen expects to make further investments of up to USD 3.5 billion in the form of equity and debt, of which up to USD 2.5 billion will be for ordinary shares of Rivian; these investments are expected to be made in two tranches of USD 1 billion each in 2025 and 2026 and a third tranche of USD 0.5 billion in 2027 or, at the latest, at the beginning of January 2028. The price of the shares is to be determined ahead of each purchase date on the basis of a defined average market price for the ordinary shares of Rivian plus a premium. In 2026, an additional amount of USD 1 billion can be drawn as a loan by Rivian and Volkswagen Group Technologies and passed on to Rivian.

In fiscal year 2024, the conditional commitment to purchase additional ordinary shares of Rivian resulted in an expense from the measurement of a derivative of €409 million. This was set against a gain of €126 million on the measurement of the convertible note due to the positive performance of the Rivian share price. These non-cash amounts were recognized in the other financial result.

MGT GAS TURBINE BUSINESS OF MAN ENERGY SOLUTIONS

In its ruling of July 3, 2024, the German Federal Ministry for Economic Affairs and Climate Action prohibited the sale of the MGT gas turbine business to CSIC Longjiang GH Gas Turbine Co. Ltd., Harbin/China. The Federal Cabinet approved the prohibition ruling.

Following the prohibition, MAN Energy Solutions SE, Augsburg discontinued the development, manufacture and sales of MGT gas turbines. It will continue its service activities for MGT gas turbines. The prohibition of the planned sale and the discontinuation of the new-build business means that these activities are no longer presented in line with IFRS 5, and led to the recognition of an impairment loss on the capitalized development costs and inventories for MGT gas turbines as of June 30, 2024. This resulted in an expense of €86 million, which is presented in cost of sales and the other operating result. There are three further types of gas turbines (THM, FT8 and S class) in addition to the MGT gas turbines. Business with these is not affected by this development.

NORTHVOLT AB

The Swedish company Northvolt AB, Stockholm/Sweden (Northvolt), in which the Volkswagen Group holds an equity investment, filed for bankruptcy protection under US law in November 2024. This had been preceded by reports regarding financial difficulties at the company. When the bankruptcy protection proceedings opened, the remaining net carrying amounts of the equity investment and the loan receivables from Northvolt were written down in full. Exempted are loan receivables from funds granted to Northvolt only after the opening of bankruptcy protection proceedings and backed by separate collateral. The write-down resulted in a non-cash expense totaling €661 million in fiscal year 2024; it is presented in the other financial result.