• Global market share increases to 12 percent
• Automotive Division reports significantly higher net cash flow
• Net liquidity in the Automotive Division exceeds €12 billion

In the first half of 2009, the Volkswagen Group extended its global competitive position and strengthened its financial base. In the first six months of the year, Europe’s largest automobile manufacturer delivered 3.1 million (H1 2008: 3.3 million) vehicles worldwide. Although the overall market contracted by around 18 percent, Group deliveries decreased by only 4.4 percent. Consequently, its share of the global passenger car market rose to 12.0 percent (9.9 percent). Sales revenue declined by 9.4 percent to €51.2 billion (€56.5 billion) in the first six months due to volume-related factors. Operating profit amounted to €1.2 billion (€3.4 billion), of which €928 million is attributable to the seasonally strong second quarter. The Group generated profit after tax of €494 million (€2.6 billion).

The Automotive Division’s net cash flow in the first six months rose substantially to €4.3 billion (€2.3 billion). Volkswagen also increased net liquidity in the Automotive Division by €4.3 billion compared with the end of 2008 to €12.3 billion as of June 30, 2009.

Winterkorn: “We are excellently positioned with our multibrand Group model”
“The course of the year so far shows that we are excellently positioned, thanks to our multibrand Group model. Even in a particularly difficult phase in the international automotive markets we were able to gain share in key markets. This has further improved our position on our way to the top,” said Prof. Dr. Martin Winterkorn, Chairman of Volkswagen Aktiengesellschaft’s Board of Management, on Thursday at the presentation of the half-yearly financial report. “Thanks to our sound business model, we increased our financial strength despite the adverse environment. This is also evident from our strong net liquidity position,” added CFO Hans Dieter Pötsch. “Preserving our financial flexibility is a top priority. At the same time, we are investing prudently in renewing and expanding our forward-looking product portfolio,” said Pötsch.

Investing in new models and locations despite the challenging environment
Despite the challenging environment, the Volkswagen Group has continued to invest in key projects for the future. Investments in property, plant and equipment in the Automotive Division rose by 14 percent to €2.5 billion (€2.2 billion). The expenditures related in particular to new production facilities, models to be launched in 2009 and 2010, and the ecological orientation of the model range. The ratio of investments in property, plant and equipment to sales revenue (capex) was 5.6 percent (4.3 percent). “Our technological capabilities are huge, and we will selectively expand them despite the ongoing crisis,” said Winterkorn.

Brands and business fields
The Group’s new model initiative is continuing to pay off: recently launched Group vehicles such as the Volkswagen Golf VI, Audi Q5, Škoda Superb and SEAT Ibiza recorded encouraging sales figures. The Volkswagen Passenger Cars, Audi, Škoda and SEAT brands outperformed the market as a whole. However, the growth of the individual brands and business fields was still hit hard by the global financial and economic crisis. The Volkswagen Passenger Cars brand recorded a lower operating profit of €216 million (€1,295 million) for the period January to June.

The Audi premium brand recorded a 13.6 percent decline in unit sales. However, with an operating profit of a substantial €823 million (€1,299 million), it impressively demonstrates that it has no difficulty competing in the current tough economic climate. The figures for the Lamborghini brand included in the key figures for Audi also declined year-on-year because of the weak market.

At the Škoda brand, a decrease in unit sales of almost 26 percent and unfavorable exchange rate conditions cut operating profit to €135 million (€381 million).

SEAT recorded a 25 percent decline in unit sales and an operating loss of €159 million (operating profit of €2 million) because of the further deterioration of the Spanish passenger car market.

The Bentley brand was unable to escape the slump in unit sales in the luxury segment, leading to an operating loss of €114 million (operating profit of €85 million).

Volkswagen Commercial Vehicles profited from the sale of the Brazilian heavy truck business in the first quarter and generated an operating profit of €463 million (€215 million) in the first half of 2009.

Scania recorded an operating profit of €48 million.

With an operating profit of €321 million (€523 million), Volkswagen Financial Services again made a significant contribution to the Volkswagen Group’s earnings.

Volkswagen’s goal is to further improve its competitive position
Volkswagen is not expecting any sustained improvement in the macroeconomic situation in the remaining months of 2009. The outlook remains uncertain and the global economic environment is challenging. Global economic growth in 2009 will be negative. The world’s automotive markets are being especially hard hit by this trend and will decline substantially compared with the previous year.

The Volkswagen Group will be unable to escape this downward trend but, as in the first six months of the year, it will perform better than the market as a whole and further increase its market share during the crisis. “The business outlook clearly remains uncertain, and we must continue to expect risks. However, we have not only the necessary scale, but also tremendous technical, ecological and economic potential. This is paying off in the crisis. And it’s why we remain committed to our goals. In 2009 alone, for example, the Group brands will launch 60 new models, product enhancements and successors in the market,” said Winterkorn.

As already announced, the Volkswagen Group’s sales revenue will be below that of the previous year due to declining unit sales. Rising refinancing costs and the deterioration of the mix will serve as an additional drag on earnings. In such a situation, Volkswagen continues to expect that it will not be able to reach the level of earnings it achieved in previous years, although the Group will close 2009 with a profit.

Wolfsburg – Volkswagen Aktiengesellschaft will take a 49.9 percent stake in Porsche AG in a first step towards an integrated automotive group with Porsche. This was agreed between Volkswagen and Porsche SE during negotiations on the contracts of implementation relating to the merger of the two companies. The Comprehensive Agreement announced in August referred to an initial participation in Porsche AG amounting to 42 percent. The timetable for the creation of the integrated automotive group remains unchanged: Volkswagen will acquire a participation in the operating business of Porsche by the end of 2009. The merger of Volkswagen AG and Porsche SE is still scheduled to take place during the course of 2011.

The adjustment of the envisaged initial participation reflects the successful progress of negotiations between Volkswagen and Porsche concerning the details of the merger which have been taking place since the Comprehensive Agreement was approved. These negotiations indicate that the projects identified for a closer cooperation have been making swifter progress than initially anticipated. This positive development for both companies, which is an expression of the compelling industrial logic behind the merger, is now to be underscored by a larger participation in Porsche AG. Volkswagen is thus securing a higher share of the increase in the value of Porsche expected from the joint projects at an early stage. At the same time, Volkswagen remains committed to the phased integration of the two companies and is preserving the independence and the interests of Porsche.

Based on the enterprise value calculated for Porsche AG, Volkswagen is expected to pay approximately EUR 3.9 billion for the participation in the company. An increase in Volkswagen’s preferred share capital is planned for the first half of 2010 in order to refinance the participation and maintain Volkswagen’s good credit rating. Shareholders will be requested to adopt a resolution authorizing such an increase at an Extraordinary General Meeting on December 3.

AUDI AG is strengthening its training activities for service employees to further boost the quality of service in Audi repair centers worldwide. The premium carmaker today opened the new Service Training Center in Neckarsulm – the sixth of its kind in Germany. Employees of the roughly 1,700 German Audi Service Centers will be trained at the Center, along with trainers who will prepare there for international assignments. With 80 different training courses and 14 qualification tracks, Audi plans this year to develop its service employees into experts who can provide top service to customers around the world.

“Audi wants to be the world’s leading brand in the area of customer satisfaction. We must therefore set ourselves apart by providing top service and outstanding customer interaction, especially when it comes to service,” said Peter Schwarzenbauer, Audi Board Member for Marketing and Sales. Given the constantly growing complexity of the Audi model range, extensive technical training provides the basis.

But there’s more to providing top service. “We are preparing our employees for the technologies of the future,” Schwarzenbauer said. “We’re training them in innovative, especially fast repair procedures, so they can help our customers more efficiently. But above all, we place a high priority on superior communication skills for all employees.”

Audi now has six training sites distributed throughout Germany, making them easily accessible for the employees of all Audi Service Centers. In 2009, service employees are to receive basic and advanced training during a total of 38,000 training days in 80 training modules. In Neckarsulm, Audi employees will now receive theoretical and practical training in a 5,400 m² facility. Trainees will acquire expertise in the bulk of the 14 Germany-wide qualification tracks, in workshop areas that feature the latest equipment and are outfitted in the new Audi corporate design. A new theme is customer communication for technicians. In complex cases, customers are to have the option of discussing their technical matters directly with an expert, who can find a more targeted approach to the solution than is possible when conferring through an intermediary service consultant. The goal is to save time – and to increase customer satisfaction.

This training is supported through selective training courses developed by Audi, covering areas such as investigating noises. Here, Audi technicians learn to use dialog with customers to quickly locate any “crackling” or “knocking” noises the customer describes. Training in “Clever Repair,” which replaces expensive replacement of a body part through more moderate dent removal – saving time and money – is also intended to immediately boost customer satisfaction. Audi is meanwhile consistently expanding technical training with a view to the brand’s technologies of the future: electric and hybrid drive systems, and lightweight design.

About 1,700 Service Centers throughout Germany send their employees to Audi’s training courses. Another essential service of the Training Center lies in the qualification of the trainers, who will transfer their knowledge to the roughly 100 export markets of the brand with the four-ring logo. The training days are supplemented with continuous self-study programs for Audi technicians, which are supported with specific computer programs and iTV shows – reports conveying information about products and repair procedures, which AUDI AG has been producing for more than four years and broadcasting to all markets via satellite.

Summit Point, West Virginia – STaSIS Inc. announced today that the company is expanding operations and transferring its corporate headquarters to Summit Point Raceway in Summit Point, West Virginia. In response to its continued growth, STaSIS is constructing a new facility in the Eastern Panhandle of West Virginia. In its new location, STaSIS will have access to one of the finest automotive test facilities in North America as well as proximity to major air and sea ports in the Washington, D.C. and Baltimore Area.

“This expansion will enable us to build a world-class automotive engineering facility so we can continue to develop innovative products, increase our dealership network, and better serve our customers,” said STaSIS president Paul Lambert. “The high quality of life in West Virginia combined with convenient access to our European partners and major east coast technical universities provides a compelling advantage to a growing company like ours.”

West Virginia Gov. Joe Manchin said STaSIS can expect a great business partner in the State of West Virginia and a dependable and adaptable workforce that will help the company grow in its new location. “STaSIS and West Virginia are an ideal match and we’re all really excited about the company’s relocation to the Eastern Panhandle,” Manchin said. “The location is convenient for STaSIS, its customers and its employees and I’m sure that our business climate and workforce will exceed all expectations.”

This expansion is in part facilitated by investments by the West Virginia Jobs Investment Trust, the West Virginia Economic Development Authority, the West Virginia Infrastructure and Jobs Development Council and other private investors. Kelley Goes, secretary of the West Virginia Department of Commerce, stated she is pleased STaSIS has decided to move to West Virginia. “We’re really thrilled that they recognize the positive business environment that West Virginia has to offer,” Goes said.

STaSIS Chief Financial Officer Todd Cope, a native of West Virginia, commented, “The financial package we worked out with West Virginia made a compelling case to relocate. The state has been very supportive of our business and we are looking forward to continued growth in our new home. We’re also recruiting talented engineering, operations, accounting and sales professionals to help us expand our product innovation teams and our dealership network.”

For information on job opportunities, see www.stasisengineering.com/jobs.

About STaSIS
STaSIS provides automotive performance distinction to the mainstream consumer market. We specialize in performance-enhancing brake, suspension, driveline and engine products leveraging race-bred technologies from our motorsports experience and top-tier race manufacturers. We engineer our products to work together, creating an ideal balance of day-to-day drivability and unrivaled performance. Our goal is to help you transform your car into one of the highest performing vehicles on the road. Learn more at www.stasisengineering.com.

STaSIS – RACE BRED ADRENALINE

Wolfsburg / Nürburg, 23 May 2009 – There could not be a better time or place for a world premiere: parallel to the start of the 24-hour race at the Nürburgring, Volkswagen is presenting the new Scirocco R for the first time anywhere. A sports car without compromise and a race track that demands everything of the driver will be meeting together this weekend.

Approximately one year after the market launch of the third Scirocco generation, Volkswagen is presenting the most powerful series built Scirocco ever made at the Nürburgring. Its charged four-cylinder 2.0 l TSI is impressive with an output of 195 kW / 265 PS and 350 Newton metres of torque – the dynamic effect is just as striking as the running gear which provides optimal traction characteristics thanks to, amongst other things, the new front axle differential lock XDS.

The design of the Scirocco R is largely based on the Scirocco GT24, which was designed for motor sports: there are large air intake openings in the front bumper which the engineers used to achieve optimal cooling for the engine and the brakes, and an integrated front spoiler as well as the bi-xenon headlights. At the rear end, the roof edge spoiler, which is much larger than on the standard model, a striking shining black diffuser and the chrome tailpipes of the dual exhaust system dominate the design. The side view of the vehicle is characterised by the powerful sill panels as well as the specially-designed 18″ alloy wheels “Talladega”.

Volkswagen will demonstrate the potential of the new Scirocco R during the 24- hour race with this racing version. With a total of five Sciroccos, driver teams including Dr Ulrich Hackenberg, member of the Volkswagen board of management for technical development, the rally world champion Carlos Sainz as well as this year’s Dakar winner Giniel de Villiers, will be at the start line.

Source: Volkswagen Media

BERLIN – Volkswagen AG said Sunday it was indefinitely postponing talks over a planned integration with Porsche SE, but the sports car maker insisted that only the next round had been canceled.

As the power struggle between two of Germany’s leading automobile companies appeared to increase, Volkswagen spokesman Peik von Bestenbostel told The Associated Press that the talks had been put on hold for an undetermined period of time, demanding a more direct engagement from Porsche.

“Before we can take up talks again, it is necessary that Porsche adopts a clearly constructive attitude toward them,” Peik von Bestenbostel said.

But Porsche insisted in a statement Sunday that while a working group meeting Monday on the fusion of the two car makers had been canceled, “The negotiations that were begun last week will continue as planned.”

The wrangling comes on the eve of a meeting by Porsche’s supervisory board, which will bring together VW Chairman Ferdinand Piech and members of the Porsche family — controlling shareholders of Porsche Automobil Holding SE.

Earlier this month, Piech and the Porsche family agreed on a plan to integrate the Porsche car-manufacturing group with Volkswagen, with the independence of the 10 brands of both companies being ensured.

But Piech, a grandson of Ferdinand Porsche, who founded the company that bears his name, questioned the plan on Tuesday by saying Porsche must reduce its debt before an integration could be possible, referring to the euro9 billion ($12.22 billion) in net debt Porsche took on as it brought its stake in Volkswagen up to 51 percent last year.

How best to handle that debt is expected to be the focus of Monday’s supervisory board meeting.

Yet VW also has accused Porsche of withholding information regarding the true expanse of its debts and what it expects to see happen if the two companies merge.

Gunnar Kilian, spokesman for the head of Volkswagen’s works council, Bernd Osterloh, told The Associated Press that constructive negotiations were not possible in the “current environment,” and he urged Porsche to clarify exactly how it envisions the integration process moving forward.

“Before we can proceed, Porsche needs to clarify exactly how they want to proceed in the event of a fusion. In particular, this needs to be discussed with our colleagues at Porsche,” Kilian wrote in an e-mail.

“Everyone at Volkswagen — from the supervisory board to the executive board to the works council — is open for a solution. But Porsche needs to make it clear internally what they hope to achieve.”

SALZBURG, Austria – Porsche SE announced Wednesday it was moving toward creating an “integrated” carmaker with fellow German automaker Volkswagen AG, but emphasized that the high-end sports car company would retain its independence.

The statement came following private meetings in Salzburg of the Piech and Porsche families — the controlling shareholders of Porsche Automobil Holding SE.

Porsche issued a statement in Stuttgart saying that they are now arguing “for the creation of an integrated car manufacturing group.”

Porsche is currently Volkswagen’s largest shareholder with 51 percent and has said it wants to raise that stake to 75 percent — but that goal probably wouldn’t be possible this year given the state of the global economy.

Porsche said the decision came out of “intensive talks about the deepening of the cooperation” which included discussing “the inclusion of capital measures.”

“In the final structure, 10 brands shall stand below an integrative leading company alongside each other, whereby the independence of all brands and explicitly also of Porsche shall be ensured,” the company said.

Porsche said talks would now continue “on this basis” with other stakeholders, including the German state of Lower Saxony.

“It is the aim to develop a corresponding basis for decision-making on the future structure of the common group within the next four weeks,” the company said.

Neither Porsche nor Volkswagen returned repeated calls seeking further details.

Media in Germany have recently reported that Porsche is experiencing financial difficulties stemming from efforts to increase its stake in Volkswagen and falling car sales from the world economic crisis.

At Volkswagen’s annual general meeting April 23, chief executive Martin Winterkorn said “I’m certain that we can and will advance our partnership in the difficult current year 2009,” but wasn’t more specific.

Winterkorn said the two companies together “have the stuff to develop the powerhouse of the international automobile industry.”

German media speculated the key topic was how to combine the two companies as Porsche looks to reduce euro9 billion in debt it took on to gain control of Wolfsburg-based Volkswagen AG, Europe’s biggest automaker by sales.

Porsche recently secured financing for euro10 billion ($13.3 billion) from a number of banks, and is reportedly seeking a further euro2.5 billion in financing.

Porsche Chief Executive Wendelin Wiedeking and Volkswagen supervisory board chief Ferdinand Piech were expected to discuss the options for the two companies, media reports said.

Piech, who owns about 10 percent of Porsche, is the grandson of Ferdinand Porsche, the founder of Porsche.

A supervisory board is the German equivalent of a U.S. board of directors.

The talks come even after Qatar acknowledged it was in discussions about the possibility of buying a stake in Porsche, too.

Sheik Hamad bin Jassem Al Thani was quoted last month by the country’s Al-Arab newspaper as saying that discussions and meetings are ongoing with the luxury sports car maker, but no decision had been reached.

Porsche shares were up 1.2 percent to close in Frankfurt at euro56.95, while Volkswagen shares were down 0.4 percent to euro232.69.

Source: Associated Press

NEW YORK - The Volkswagen Golf was honored as
the 2009 World Car of the Year. A jury comprised of fifty-nine
international automotive journalists from twenty-five countries around the
world chose this year's World Car of the Year, which was announced this
morning at a news conference during the New York International Auto Show.

    "It is a tremendous honor for Volkswagen to have its global best
selling model, the Golf, named the 2009 World Car of the Year," said Stefan
Jacoby, President/CEO, Volkswagen of America, Inc. "This is a great way to
kick-off the new Golf here in America. We're excited for the arrival of the
sixth generation Golf, which will be in Volkswagen showrooms later this
year. Simply put, we believe this is the best Golf ever."

    The Golf, a perennial favorite in the Volkswagen line-up, has sold more
than 26 million units in 120 countries, making it one of the top selling
vehicles of all-time. The new sixth generation Golf first debuted at the
Paris Motor show last fall, and made its U.S. debut at this year's New York
International Auto Show. The Golf has been designed to be quieter,
sportier, fuel efficient and present a clean, distinctive appearance that
-- staying true to Volkswagen -- is fun-to-drive.

    The new Golf embodies Volkswagen's product strategy aimed to sharpen
the brand design in all classes and apply greater global consistency among
model names. These steps are intended to leverage the offerings of the
world's third largest automaker as it looks to increase sales and market
share. The 2010 Golf will be available in dealer showrooms across the U.S.
this fall in gasoline and TDI versions.

    Volkswagen of America, Inc.

    Founded in 1955, Volkswagen of America, Inc. is headquartered in
Herndon, Virginia. It is a subsidiary of Volkswagen AG, headquartered in
Wolfsburg, Germany. Volkswagen is one of the world's largest producers of
passenger cars and Europe's largest automaker. Volkswagen sells the Rabbit,
New Beetle, New Beetle convertible, GTI, Jetta, Jetta SportWagen, GLI, Eos,
Passat, Passat wagon, CC, Tiguan, Touareg 2 and Routan through
approximately 600 independent U.S. dealers. All 2009 Volkswagens come
standard-equipped with Electronic Stabilization Program. This is important
because the National Highway and Traffic Safety Administration (NHTSA) has
called ESC the most effective new vehicle safety technology since the
safety belt. Visit Volkswagen of America online at vw.com or
http://www.media.vw.com to learn more.

SOURCE Volkswagen of America, Inc.

What Volkswagen plans on doing beyond its R32 is largely up in the air, but we have a pretty good idea. The competition such as Mitsubishi’s EVO and Subaru’s WRX have taken some lead over the lil hatchback down the straight,  but hold on, we’re about to hit a chicane….Reports would suggest that VW is expressing serious interest in dropping its naturally aspirated route and going force fed.
Do we agree? Oh yes….

Prevailing rumors indicate that a version of the company’s 2.0-liter turbo will replace the current R32’s 3.2-liter V6. Despite the fall in displacement, the new drivetrain is tipped to make around 270 brake horsepower – more than 20 ponies above the current car, all while resulting in a lighter package to boot. The hatch should be good for a 0-60 miles-per-hour time in around five seconds dead, and an artificially limited top end of 155 miles-per-hour. Tuned also expects the car to be available with the buyer’s choice of a six-speed manual or a DSG dual-clutch gearbox,.

Now the big question is will VW drop its 4Motion platform or go FWD in order to save costs, cut weight and simplify the build itself. The power plant comes straight from Audi’s S3 motor which has proven to be both bullet proof and highly reliable. Judging from the S3’s performance, an AWD system wouldn’t hurt this car considering that the weight gained through 4Motion will be lost in the 4 cylinder engine.

Aesthetic upgrades look to be similar to the current R32, meaning a set of larger wheels and tires, an aero kit with flared arches, a throatier exhaust, and quite possibly some LED running lights cribbed from Audi’s design sheet.

Will we see this hot hatch in the States? We will have to wait for the Geneva Motor Show for more info, stay Tuned…..