Investments

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong (Sinotruk), Bertrandt AG, Ehningen (Bertrandt) and There Holding B.V., Rijswijk (There Holding) were material at the reporting date.

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. In addition to the partnership with Sinotruk in the volume segment, exports of MAN vehicles to China are also helping to expand access to the small, but fast-growing premium truck market. Sinotruk’s principal place of business is in Hongkong, China.

As of December 31, 2015, the quoted market price of the shares in Sinotruk amounted to €251 million (previous year: €317 million).

Bertrandt

On July 2, 2014, Dr. Ing. h.c. F. Porsche AG, Stuttgart, increased its interest in Bertrandt by just under 4%. Following this acquisition, Volkswagen indirectly holds just under 29% of the voting shares of Bertrandt. There has been no change in the intention not to exercise any influence on Bertrandt’s supervisory board or management board. Bertrandt has been included in the Volkswagen Group’s consolidated financial statements as an equity-accounted associate from the date on which the additional shares were acquired. In the previous year, the amounts resulting from the fair value measurement of the shares amounting to €148 million that had previously been recognized outside profit or loss in the other reserves in this connection were recognized in profit or loss in the other financial result.

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.

As of December 31, 2015, the quoted market price of the shares in Bertrandt amounted to €327 million (previous year: €338 million).

There Holding

Audi, the BMW Group and Daimler AG each acquired a 33.3% interest in There Holding, which was formed in 2015. Effective December 4, 2015, There Holding acquired all shares in the HERE Group through a wholly owned subsidiary, There Acquisition B.V., Rijswijk (the Netherlands), for a purchase price of €2,602 million. HERE develops and sells high-resolution maps with real-time location information. The purchase price was financed largely by way of capital contributions at There Holding. Audi’s share of it amounts to €668 million. The remainder of the purchase price was financed through bank loans at There Acquisition B.V. There Acquisition B.V. was renamed HERE International B.V. on January 29, 2016.

There Holding is an associate that is accounted for using the equity method. As the acquisition took place near the end of the reporting period, it was not possible to fully identify all hidden reserves and liabilities. This is expected to be done in the first quarter of 2016. In light of this, and also for reasons of materiality, There Holding was not included at the reporting date on the basis of the Group’s share of profit or loss.

Unrecognized losses relating to investments in associates totaled €3 million (previous year: €– million). Contingent liabilities relating to associates amounted to €0 million (previous year: €3 million).

INTERESTS IN JOINT VENTURES

From a Group perspective, the joint ventures FAW-Volkswagen Automotive Company, Ltd., Changchun, SAIC-Volkswagen Automotive Company Ltd., Shanghai (formerly: Shanghai-Volkswagen Automotive Company Ltd., Shanghai), SAIC-Volkswagen Sales Company Ltd., Shanghai (SAIC-Volkswagen Sales Company) and Global Mobility Holding B.V., Amsterdam (Global Mobility Holding) 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.

Global Mobility Holding

Through its 50% interest in the joint venture Global Mobility Holding B.V., Amsterdam, the Netherlands (GMH), the Volkswagen Group holds a 50% indirect stake in the joint venture’s subsidiary, LeasePlan Corporation N.V., Amsterdam, the Netherlands (LeasePlan). GMH’s business activity consists of holding the interest in LeasePlan. LeasePlan is a Dutch financial services group whose core business is leasing and fleet management. GMH’s principal place of business is in Amsterdam, the Netherlands.

In 2010, Volkswagen agreed with Fleet Investments B.V., Amsterdam, the Netherlands, an investment company belonging to the von Metzler family, that Fleet Investments would become the new co-investor in Global Mobility Holding. The previous co-investors were instructed by Volkswagen AG to transfer their shares to Fleet Investments B.V. on February 1, 2010 for the purchase price of €1.4 billion. Volkswagen AG has granted the new co-investor a put option on its shares. If this option is exercised, Volkswagen must pay the original purchase price, less purchase price reductions, plus accumulated pro rata preferred dividends. Additionally, Volkswagen AG has a preemptive right of purchase at any applicable higher fair value. The put option is accounted for at fair value.

In addition, Volkswagen has pledged claims under certificates of deposit with Bankhaus Metzler in the amount of €1.3 billion to secure a loan granted to Fleet Investments B.V. by Bankhaus Metzler. This pledge does not increase the Volkswagen Group’s risk arising from the above-mentioned short position. In fiscal year 2015, the put option and the certificates of deposit were prolonged until a maximum of September 30, 2018, subject to several conditions.

On July 23, 2015, GMH sold its 100% interest in LeasePlan to a consortium of international investors. The legal transfer of the shares is subject to the condition precedent that the necessary official approvals are issued during the further course of the sale. The transaction could not be completed in the past fiscal year because official approvals are still outstanding. With respect to the final official approvals issued in January 2016, please refer to the disclosures on “Events after the balance sheet date”.

Volkswagen AG did not grant additional credit lines either to the consortium of investors or to LeasePlan in connection with the intended sale of the indirect interest in LeasePlan. On completion of the transaction, the existing credit line of €1.3 billion provided by the Volkswagen Group will be cancelled.

There were no unrecognized losses relating to interests in joint ventures. Contingent liabilities relating to joint ventures amounted to €121 million (previous year: €86 million). Cash funds of €72 million (previous year: €24 million) were deposited as collateral for asset-backed securities transactions and are therefore not available to the Volkswagen Group.

OTHER EQUITY INVESTMENTS

On August 29, 2015, an arbitration ruling was delivered to the parties in the proceedings between Suzuki Motor Corporation and Volkswagen AG. It found that Volkswagen had acted in accordance with the agreement. The arbitration court also confirmed that Suzuki was in breach of contract and, on the merits of this case, acknowledged that Volkswagen had a claim to damages. In addition, the arbitration court established that the parties had the right to give regular notice to terminate the cooperation agreement. It said that Suzuki had exercised this right, ending the partnership. According to the court, the agreements had to be interpreted in such a way that Volkswagen had to sell its equity investment in Suzuki on termination of the partnership. Volkswagen consequently sold its 19.9% equity investment to Suzuki on September 17, 2015 at the quoted market price of €3.1 billion. The sale of the shares generated income in the amount of €1.5 billion, which was recognized in the other financial result.

In February 2016, Volkswagen and Suzuki agreed a settlement in respect of the claims for damages brought by Volkswagen.