Investments

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong, China (Sinotruk), Bertrandt AG, Ehningen (Bertrandt) and There Holding B.V., Rijswijk, the Netherlands (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, 2016, the quoted market price of the shares in Sinotruk amounted to €466  million (previous year: €251 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.

As of December 31, 2016, the quoted market price of the shares in Bertrandt amounted to €284 million (previous year: €327 million).

There Holding

The Audi Group, the BMW Group and Daimler AG each hold a 33.3% interest in There Holding B.V., Rijswijk, the Netherlands, which was formed in 2015. Effective December 4, 2015, There Holding B.V. acquired all shares in the HERE Group through a wholly owned subsidiary, There Acquisition B.V., Rijswijk, the Netherlands, for a purchase price of €2,593 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 B.V. 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 B.V. is an associate that is accounted for using the equity method. The identification of hidden reserves and liabilities was completed in the first quarter of 2016. In view of the timing of this, and also for reasons of materiality, There Holding was not included as of December 31, 2015 on the basis of the Group’s share of profit or loss.

In December 2016, There Holding B.V. signed contracts to sell a total of 25% of its shares in HERE International B.V. A 15% share was acquired by Intel Holdings B.V. The sale of 15% of these shares to Intel Holdings B.V. was completed in January 2017. The remaining 10% was sold to a Chinese consortium consisting of NavInfo Co. Ltd., Tencent Holdings Ltd. and GIC Private Ltd. It is expected that this transaction will be completed in the first half of 2017, after it has been approved by the competent authorities.

Navistar

Volkswagen Truck & Bus GmbH, a wholly owned subsidiary of Volkswagen AG, and US-based commercial vehicles manufacturer Navistar International Corporation, Lisle, USA, announced on September 6, 2016 that they had entered into a far-reaching alliance. This includes framework agreements for a strategic technology and supply cooperation, as well as a procurement joint venture. Additionally, Volkswagen Truck & Bus will acquire a 16.6% equity interest in Navistar by subscribing for a capital increase. The share price amounts to USD 15.76 and the total purchase price comes to USD 0.3 billion. The closing of the transaction and hence the implementation of the strategic alliance is subject to certain regulatory approvals and other customary closing conditions. The closing of the share acquisition by Volkswagen Truck & Bus is further subject to the finalization of the agreement governing the procurement joint venture and of the first contract under the technology and supply cooperation. The transaction is expected to close in the first quarter of 2017.

Unrecognized losses relating to investments in associates totaled €5 million (previous year: €3 million). There were no contingent liabilities relating to associates.

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 (formerly: Shanghai-Volkswagen Automotive Company Ltd., Shanghai, China), SAIC-Volkswagen Sales Company Ltd., Shanghai, China (SAIC-Volkswagen Sales Company) and Global Mobility Holding B.V., Amsterdam, the Netherlands (Global Mobility Holding) were material at the reporting date and the prior-year 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 held a 50% indirect stake in the joint venture’s subsidiary, LeasePlan Corporation N.V., Amsterdam, the Netherlands (LeasePlan). GMH’s business activity consisted of holding the interest in LeasePlan. LeasePlan is a Dutch financial services group whose core business is leasing and fleet management.

On July 23, 2015, GMH sold its 100% interest in LeasePlan to a consortium of international investors. The final approvals for the sale of LeasePlan to the consortium of investors were issued by the competent authorities in January 2016. Legal transfer of the LeasePlan shares was completed on March 21, 2016.

The total value of the transaction was approximately €3.7 billion plus interest in the amount of €31.5 million. In 2016, this had a positive effect of €2.2 billion on investing activities attributable to operating activities and net liquidity and, taking into account the disposal of equity-accounted investment in GMH, resulted in an income amount of €0.2 billion for the Volkswagen Group, which is reported in the financial result. On completion of the transaction, the existing credit line of €1.3 billion provided by the Volkswagen Group was canceled.

There were no unrecognized losses relating to interests in joint ventures. Contingent liabilities relating to joint ventures amounted to €183 million (previous year: €121 million). Cash funds of €173 million (previous year: €72 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 in Suzuki 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 in the third quarter of the previous year.

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