Volkswagen Group of America Moves Forward With 'Strategy 2018' Plan

2008 Year of Change Initiatives Place Group on Solid Foundation --

HERNDON, Va., January 12, 2009: Volkswagen Group of America, Inc. asserted solid progress toward growing its sales and market share in the U.S. was made in calendar year 2008, current economic conditions notwithstanding. The company has set a goal of selling one million Volkswagens and Audis by 2018, as part of the worldwide Volkswagen Group's focus on becoming an economic and environmental leader in the global automotive industry. In the U.S., the Group saw an exciting year of change, taking steps in such areas as product quality, product offerings, brand management, customer experience, technology, retail support and manufacturing to strengthen its standing in the world's premier market.

"We all know the many difficulties the automotive sector faced in 2008. There is no doubt that 2009 looks to be at least as challenging, yet we are optimistic for a bright future here in the U.S.," said Stefan Jacoby, President and CEO for Volkswagen Group of America. "Increased market share, products right for the times, creative marketing, strong retail support, engaged employees and a motivated and enthusiastic dealer body all have and will continue to play an important role in meeting the challenges ahead."

Volkswagen's bullish outlook is based on the many key measures put in place throughout 2008.

First and foremost, five new products from Volkswagen and four from Audi hit the streets in 2008. The expanded product line garnered positive reactions from dealers, customers, the media and highly regarded industry experts. "The introduction of the Tiguan, Routan, Jetta TDI, Jetta Sportwagen, and CC from Volkswagen and the A4, A5, TTS and a refreshed A3 from Audi contributed to the Group increasing its market share by 20 percent in 2008 and places the Group in a good position to meet the needs of customers seeking vehicles that are efficient, environmentally friendly, safe, well- built and apportioned, and attractively priced," Jacoby added.

Accolades and awards bestowed on Volkswagen and Audi in 2008 included "Top Safety Pick" recognition from the Insurance Institute for Highway Safety (IIHS) for seven 2009 Volkswagen models -- the Tiguan, Jetta, Jetta Sportwagen, Eos, Rabbit, Passat and Passat Wagon. IIHS also awarded top safety marks to the 2009 Audi A3, A4, A6 and Q7.

The Audi R8 sports car earned Automobile Magazine's "2008 Car of the Year" and "Design of the Year" honors. On top of that, the Robb Report and Playboy named the R8 "Car of the Year" in their competitions. Automobile Magazine further recognized Audi's design leadership by picking the A5 as its "2009 Design of the Year." Strategic Vision chose the Q7 as a "2009 Total Value Index" winner along with the A3.

Kelley Blue Book recognized the Volkswagen brand with its 2008 Best Resale Value Award, the Rabbit for "Top 10 Coolest New Cars Under $18,000," and "Top 10 New Back-to-School Cars," among others. Car and Driver recognized the GTI as one of its "2008 10 Best Cars." Automobile Magazine gave the Volkswagen GTI and the Audi R8 "2009 All-Star Award" recognition.

Volkswagen improved its position in the J.D. Power Initial Quality Survey. Volkswagen brand continued to do well in Strategic Vision's Total Quality Index which offers a complete measure of new vehicle owner satisfaction, evaluating all aspects of the ownership experience.

"The Group is making investments in a next-generation Volkswagen Compact Sedan, as well as the Rabbit, GTI, Touareg TDI, Rabbit TDI and Audi Q7 TDI that we will be introducing in 2009 and 2010," said Jacoby.

The Group also made significant investments in its manufacturing, central functions, design, engineering and research operations in 2008. "First among these is the $1 billion investment in the new production facility in Chattanooga, Tennessee, which is progressing nicely. This plant will build a new Mid-size Sedan designed specifically for the U.S. market and destined to play a key role in meeting our long term goal," said Jacoby. "This plant will create 2,000 direct jobs in the region." According to studies, the new plant is expected to generate $12 billion in income growth and an additional 9,500 jobs over the life of the project. Start of production is slated for early 2011, with an annual capacity of 150,000 vehicles, 30 percent of which will be powered by Volkswagen's TDI clean diesel technology.

The Group also made investments in its manufacturing operations in Mexico and Europe that will benefit U.S. customers as well.

2008 also witnessed how the future will drive with the introduction and demonstration of new powertrain, safety and customer convenience technologies from Volkswagen. The August introduction of TDI clean diesel technology in the U.S. market, a first for Volkswagen, is proof of the Group's commitment to provide customers an alternative in their purchase of fuel efficient, clean emissions vehicles that are also fun to drive. The Jetta TDI was recently named 2009 Green Car of the Year.

The Group also demonstrated its work on environmentally responsible technologies beyond clean diesel. At the Los Angeles Auto Show, Volkswagen showed no less than three fuel cell prototypes of the Tiguan, Touran, and Passat Lingyu. Sixteen fuel cell vehicles are currently being tested on the roads of California in a durability study conducted as part of the California Fuel Cell Partnership. The Group also was part of a historic two-week adventure in summer 2008 that spanned the U.S. and demonstrated the power of hydrogen in the form of a zero-emission HyMotion Tiguan.

Audi showcased the range and capabilities of its clean diesel TDI models by sponsoring a 4,800-mile coast-to-coast Audi Mileage Marathon. In that endurance test, teams of drivers competed to maximize the efficiency of 23 A3, A4, Q5 and Q7 TDI models. The Audi A3 2.0 TDI achieved an impressive 47.04 mpg on average, and during one stage squeezed more than 50 miles from a gallon of diesel, on average.

At the same time the Volkswagen Group was showcasing an array of innovative and economical drive technologies on the West Coast, its investments in smart car technologies, including autonomous vehicles, were being demonstrated on the streets of New York at the Intelligent Transportation Systems World Congress. Using advanced sensors, artificial intelligence and a process called sensor fusion, Volkswagen demonstrated how it is working to making driving safer, easier and more comfortable by connecting systems within the car and with the environment outside the car through car-to-car and car-to-infrastructure capability.

"Developments in smart car technologies where cars are capable of collaborating with their users and their environment portend great advances in safety and environmentally friendly vehicle efficiency," predicted Jacoby.

One smart technology that is proving its worth is electronic stability control (ESC), branded by Volkswagen as Electronic Stabilization Program, which Volkswagen made standard on all 2009 models, a full three years ahead of the government mandate. The National Highway Traffic Safety Administration (NHTSA) and the IIHS have stated their research has found ESC results in 35 percent fewer single-vehicle crashes, 30 percent fewer single-vehicle fatalities in passenger cars, could save 10,000 lives annually and reduce rollover risk by as much as 80 percent. Audi introduced ESP to the U.S. market in 1999, making it standard on all vehicles since model year 2002.

Volkswagen also took steps in the operational end of its business to strengthen the brand. More than half its Volkswagen brand dealers have invested in the Marketplace exclusive showroom concept, an approach that is paying dividends in increased sales. The firm relocated its U.S. headquarters to be closer to its customers, while keeping a significant presence in the technical capital of the industry. And Volkswagen brand added peace of mind to the already long list of benefits that come with owning a well-engineered Volkswagen: the Carefree Maintenance Program. Under the new Carefree Maintenance Program, there are no charges for regularly scheduled maintenance activities on 2009 models for three years or 36,000 miles, whichever comes first.

Audi saw its dealers commit nearly $1 billion of investment in the brand with ongoing and future upgrades. Audi dealers also enjoy one of the automotive industry's strongest returns on investment.

The operational measures extend to its finance arm. The need for a reliable, fiscally sound credit source is also an absolute necessity in order to continue to grow the Volkswagen and Audi business. Volkswagen Credit is a valuable asset, recording another profitable year in 2008. JD Power recently ranked Volkswagen Credit and Audi Financial Services near the top in their annual Surveys on dealer financing satisfaction for purchases and leases.

"Volkswagen Credit will continue to play a key role in our push towards greater volume and profitability. Our Volkswagen and Audi dealers count on a strong financial partner for their floor plan requirements as well as a consistent buyer of financial paper," said Jacoby.

"2008 has been a year of transition for our company. We have reset the start button on virtually all of our business units and processes. We have taken great strides towards becoming the most innovative high-volume brands in the U.S. We look confidently towards the future," said Jacoby.