Volkswagen AG: Outlook 2005

WOLFSBURG, Germany--March 8, 2005--The Volkswagen Group (FWB:VOW) (LSE:VKW) (SWX:VOW) held its own in a difficult 2004. Despite unfavorable macroeconomic conditions, the earnings guidance published in July 2004 was exceeded. At more than EUR 2.0 billion, operating profit before special items exceeded the forecast EUR 1.9 billion. The Automotive Division recorded a clearly positive net cash flow of EUR 1.9 billion. Cash flows from investing activities in the Automotive Division were reduced by around 17 percent. The new model initiative was successful. The Group exceeded its target of more than 5 million deliveries to customers.

Volkswagen assumes that the situation will remain difficult in the key automotive markets, such as Germany, China and the USA. In the face of growing price pressure, continuing unfavorable exchange rates and uncertainty about raw material price developments, the competitive situation in the industry will remain tense.

As expected, the markets had a weak start to the new year. In January and February 2005, the Volkswagen Group delivered approximately 687,000 vehicles to customers worldwide, 0.5 percent fewer than in the same period of 2004. While deliveries in China declined by 33,000 units year-on-year, cumulative sales in all other markets rose by approximately 30,000 units in January and February.

As in the previous year, operating profit for the first quarter of 2005 will not be satisfactory. However, Volkswagen is expecting an improvement in the course of the year because important, high-volume models will be available from the 2nd quarter and 2nd half of 2005.

Driven by over 20 new products and product variants to be launched in 2005, the Volkswagen Group assumes it will increase its worldwide deliveries to customers in 2005.

Operating profit after special items will improve year-on-year in 2005 - although the extent of this improvement depends on external factors that cannot be predicted at present. However, thanks to new products, ForMotion and the enhanced performance of the Group, the situation will improve.

VOLKSWAGEN AG
Brieffach 1970
38436 Wolfsburg
Deutschland

ISIN: DE0007664005 (DAX)
WKN: 766400

Listed: Amtlicher Markt in Berlin-Bremen, Dusseldorf, Frankfurt (Prime Standard), Hamburg, Hannover, Munchen und Stuttgart; EUREX; Amsterdam, Antwerpen, Brussel, London, Luxemburg, Paris, Schweizer Borse (Hauptsegment), Wien, Tokio, Madrid, Barcelona, Bilbao, Valencia und Mailand

Issuer's information/explanatory remarks concerning this ad hoc announcement:

Outlook