Volkswagen AG: Interim Report January-June 2006

Interim Report January-June 2006:

--  Increase in Volkswagen Group operating profit before special items
    by 51.3% year-on-year to EUR 2.0 billion in the first six months
    of 2006, but still well below medium-term earnings target

--  Positive one-off factors in the form of gains on the sale of gedas
    AG and Volkswagen Bordnetze GmbH (EUR 0.3 billion) and negative
    effects resulting from restructuring expenses (EUR -1.3 billion)
    reduced Automotive Division operating profit by a net EUR 1.0
    billion in the first six months of 2006

--  Automotive Division operating profit after special items lower
    than in previous year due to negative one-off factors; Financial
    Services operating profit above high prior-year level

--  Gain on sale of Europcar required to be reported separately under
    IFRSs as "profit from discontinued operations" presented below
    continuing operations in the consolidated income statement. Cash
    generated by the sale contributes to increase in Automotive
    Division net liquidity to EUR 6.4 billion

--  Group pre-tax profit from continuing operations improves by 17.3%
    to EUR 751 million

--  Group products successful:

    --  Deliveries to customers up by 11.9% year-on-year to 2.9
        million vehicles; increase in market share especially in
        Germany and Western Europe

    --  All Group brands generate higher sales figures than in the
        previous year

    --  Full availability of new models drives significant increase in
        deliveries in the USA (+16.5%); Passat Lingyu and Jetta
        Sagitar primary contributors to increase in deliveries to
        customers in China

    --  Successful market launch of Eos, Polo GTI and Audi A6 Allroad
        quattro; Audi presents new Audi S6, S8 and TT Coupe models

    --  Skoda Roomster received positively by the market; sales
        figures for new SEAT Leon almost double year-on-year

    --  Volkswagen Commercial Vehicles premiers new Crafter at the
        Birmingham Motorshow

January-June                                    2006   2005*)  +/- (%)
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Volkswagen Group:



Deliveries to customers       '000 units       2,864    2,559  + 11.9

Vehicle sales                 '000 units       2,866    2,543  + 12.7

Production                    '000 units       2,890    2,634   + 9.7

Employees                   June 30/Dec. 31  329,405  344,902   - 4.5





Continuing operations:

  Sales revenue              EUR million      51,892   45,446  + 14.2



  Operating profit before
   special items             EUR million       2,029    1,341  + 51.3

  Special items              EUR million       - 995        -       x

  Operating profit after
   special items             EUR million       1,034    1,341  - 22.9



  Profit before tax from
   continuing operations     EUR million         751      640  + 17.3

  Profit from continuing     
   operations                EUR million         390      379   + 3.1



Profit from discontinued
 operations**)               EUR million         796       24       x

Profit after tax             EUR million       1,186      403       x


Automotive Division (including allocation of consolidation adjustments
between the Automotive and Financial Services divisions):

Cash flows from operating 
 activities                  EUR million       6,291    3,333  + 88.7

Cash flows from investing
 activities***)              EUR million         598    2,675  - 77.7

Net liquidity on June 30     EUR million       6,365  - 1,303       x

----------------------------------------------------------------------

*)   Financial data restated.

**)  Net gain on disposal of the Europcar group and the Europcar's
      current profit after tax for January to May 2006/H1 2005.

***) Excluding acquisition and disposal of equity investments:
      EUR 2,113 million (EUR 2,606 million).

The most important automotive markets recorded robust growth in the first six months of 2006, despite the difficult macroeconomic environment. The level of the first half of 2005 was exceeded. However, high energy and commodity prices, coupled with political turmoil in the Middle East, will continue to put pressure on the global economy. Increasing price pressure and continuing unfavorable exchange rates are exacerbating the situation for automobile manufacturers. Nevertheless, we are still predicting a modest increase in global passenger car sales. Demand in the US and Western European markets is likely to remain stable, and we are expecting slight growth in the German passenger car market.

We expect our market position to improve in the current year driven by higher deliveries, especially in Western Europe and the USA. All brands are represented by new volume models, and our product rollout will be continued in the second half of the year. We are expecting delivery figures in the Chinese and South American/South African markets to increase significantly, and are thus assuming overall growth in our deliveries to customers.

The resulting increase in sales revenue, combined with the measures implemented as part of ForMotionplus, will help achieve a year-on-year improvement in 2006 in operating profit before special items. We also expect the Automotive Division to record a positive net cash flow in 2006 and a further improvement in net liquidity compared with December 31, 2005.

Wolfsburg, July 27, 2006

Volkswagen AG - The Board of Management

(The full interim report is available at "www.volkswagen-ir.de")