Christine Ritz Hans Dieter Pötsch - Chief Financial Officer, Head of Controlling & Accounting and Member of Management Board Christian Klingler - Executive Officer of Sales & Marketing, Group Board of Management Member for Sales and Member of the Management Board Martin Winterkorn - Chairman of Management Board and Chief Executive Officer Stephan Gruhsem - Head of Group Communications, External Relations & Investor Relations

Michael John Tyndall - Barclays Capital, Research Division Horst Schneider - HSBC, Research Division Stephen Reitman - Societe Generale Cross Asset Research Daniel Schwarz - Commerzbank AG, Research Division Bernard Donges - JP Morgan Chase & Co, Research Division Charles Winston - Redburn Partners LLP, Research Division Stuart Pearson - Morgan Stanley, Research Division Fraser Hill - BofA Merrill Lynch, Research Division Frank Biller - Landesbank Baden-Wurttemberg, Research Division Christian Breitsprecher - Macquarie Research

Good day, ladies and gentlemen, welcome to the Volkswagen AG's Yearly Financial Report January to June 2012 Conference Call. For your information today's conference is being recorded. At this time, I would like to turn the conference over to Christine Ritz, Head of Group Investor Relations for Volkswagen AG. Please go ahead.

Ladies and gentlemen, welcome to Volkswagen conference call on the results for the period January to June 2012 based on the ad hoc and the half yearly report we published this morning. Joining me today on this call are Hans Dieter Pötsch, Member of the Board of Management Volkswagen AG, responsible for finance and controlling; and the Member of the Board Management Volkswagen AG responsible for group sales and marketing, Christian Klingler. As usual, you can follow the webcast and download the chart from our website at www.volkswagenag.com/ir. Questions can be sent by e-mail or coded. After the presentation, we will take questions first from analysts and then those from journalists. Let me now pass you over to Mr. Pötsch. Hans Dieter Pötsch: Thank you, and allow me to add my warm welcome to those of you joining this call today. I'm happy to be able to report to you today that the positive start we saw in the first quarter has continued in the second quarter despite an increasingly difficult economic environment particularly here in Europe. In the first 6 months of 2012, the Volkswagen Group delivered 4.6 million vehicles to customers across our car and truck division, an increase of over 10% showing the strength of our brands and our globalization strategy. The volume increase, including the consolidation of MAN [ph] drove sales revenue up to EUR 95.4 billion and operating profit to EUR 6.5 billion. Profit before tax increased to more than EUR 10 billion for the first 6 months, benefiting from a higher financial result in particular from strong earnings at our equity account and investments, in particular in China, as well as from a further positive EUR 2.6 billion improvement in the measurement of the put/call rights we hold in Porsche. Automotive net liquidity ended the first half at close to EUR 15 billion, down just over EUR 2 billion on the year end as we continue to invest in new product and plants and also in trucks. Allow me now to hand you over to Mr. Klingler who will take you through our sales performance in difficult market conditions during the first 6 months. Mr. Klingler, over to you.

Ladies and gentlemen, a warm welcome to the conference call from me also. This chart shows half yearly growth of the World Car Market and group deliveries to customers in comparison to the same period of last year. Market growth is observed in most regions around the world and especially in Asia. The exception is Western Europe where the Eurozone debt crisis had led to heavy contractions in the markets such as Italy, France, Portugal and Greece. While markets such as Germany still reports on growth. An elevated level of market risks exists across the whole region. Negative developments stemming from Euro are impacting consumer confidence around the globe and in particular in economies which export to the region. In spite of this, in the first half of 2012, we see growth in major markets such as China, Russia and North America. However, even this positive development has upticked [ph] increasing risk which we continue to closely monitor. Now looking at the top of the car market performance and their a comparison to the Volkswagen Group in the first half of 2012 on a regional base. As you can see, the Volkswagen Group has outperformed the market in every region. However, our worldwide market has grown by only 0.1% due to the change of the market mix. Western Europe, a region with a strong performance has declined further regions where our market shares are lower, for example, North America have grown. The Western European market declined by 7%, although the Volkswagen Group recorded a decline of just 2.2%. As already mentioned, major market in the region suffered significant reductions and made a weak economy background. In particular, the Portuguese and Greek market contracted by over 40% against the first half of 2011, and Italy and France are down by 20% and 15% respectively. While the current European crisis remains unresolved, we see considerable further risk to the car market volumes. Strong market had been [indiscernible] to continue such as record-high unemployment in Southern Europe plus weak consumer sentiment across the region. Austerity measures like the recent Spanish VAT increase further constrained these markets. The situation is placed in the whole automated industry under considerable pressure. Competition has intensified significantly which places particular strain on manufacturers which focus on smaller vehicles and Southern Europe. We closely monitor the situation in each market. The potential impact for the car market and our business from further shocks to the financial systems and balance sheet substantial. While likely, the Eurozone in color up scenario will heavily impact the entire global economy. The impact on our business [indiscernible] severe considerably worse than in 2009. Now we would take a look at the performance of the individual trends of the group. In the first half of 2012, nearly all of our volume brands achieved an increase in terms of sales and for the group. Total deliveries to customers exceeded last year's level by more than 10%. Volkswagen Passenger Car deliveries were up by an impressive 10.2% to nearly 2.8 million cars driven by a robust sales records and strong demand in China, the U.S., Russia and Germany. Audi delivered by 12 -- sorry, Audi deliveries rose by 12.3% compared to last year to 733,000 cars being very successful in China, the U.S., Germany and Russia. Skoda expanded deliveries up to 493,000 cars, mainly due to the strong demand in Russia, China and India. Sales suffered from the weak Western European markets, whereas, Bentley has managed to expand deliveries. Volkswagen Commercial Vehicles increased deliveries by 3.7% with strong demand in Germany, Russia and in Australia. Now let's turn to a look at the situation of the commercial vehicle of the Volkswagen Group. The global market for heavy truck declined by 8%. In particular, South America declined with 12% mainly in Brazil, showing worsened economic and financing conditions. In addition, the Brazilian market followed the change over to Euro 5 engines and uncertainty of the customers with regards to the availability of lower sulfur diesel and fluid additives. Western Europe declined by 5%, also feeling the effect of that euro crisis. But the main focus in Europe and South America, Scania and the MAN clearly felt the impact of these declining markets with a decrease of truck and bus deliveries in the first off of the year 2012 of 20.5% for Scania and 9.6% for MAN. Besides the Scania in Brazil, we're nearly in line with the heavy-duty subsequent development specially as Scania moved early to Euro 5 engines while others have used 3 trucks from stock [ph]. In Europe, OEMs hold the best selling trucks from stock with heavy discounts. Scania already reduced productions in 2011 and could avoid similar access [ph], but also impacted in Brazil MAN was able to compensate for the shrink in market in Europe, for example, with the high cost in Russia. Underlying first in power engineering where we are represented by MAN grew by 3% and reached $3 billion. Let us now take a look at a few highlights on some of our new models which we will provide a good base for our sales performance in the coming months. The Volkswagen GTI convertible is the most powerful golf convertible ever and has unlimited driving pleasure with the high driving dynamics and feeling of freedom. Shown at the Geneva Motor Show in March, the Volkswagen Golf GTI convertible was introduced on the markets last month. This year, Mii 4 Doors is the car of the charisma meets practically city living. It combines a sporty militarian design with more function roominess and more comfort. The said Mii 4 Doors was shown at the Geneva Motor Show and hit the road this May. The Audi A8 Hybrid is the world's most efficient luxury class hybrid sedan and also the only European full hybrid in the segment. Efficiency on a grand scale. The Audi A8 Hybrid had its world's premiere at International Motor Show in Frankfurt last year and it was introduced in the markets last month. The MAN TGX made in Brazil has seen an eminence of excellent performance at high level of comfort. Produced at the MAN Latin America plant in Resende, it meets the requirements of the cross market in Central and South America using the best German technology. The MAN TGX had its market premiere in Brazil this April.

Thank you, Mr. Klingler. Now let me turn to Mr. Pötsch for some more details on the key elements of our financial performance. Hans Dieter Pötsch: In the first 6 months of 2012, sales revenue increased to EUR 95.4 billion, that's up 22.6%. Excluding the first-time consolidation of MAN, revenue increased an impressive 12.6%. Focusing at first on our car and light commercial vehicle business. Higher volume contributed EUR 5.7 billion to the improvement. Pricing was a positive EUR 0.3 billion, demonstrating our resilience in light of tough market conditions while mix, including both product and country mix contributed EUR 2.1 billion to out performance. In difficult times, high-quality, well-equipped cars are still in demand. Currency, mainly the U.S. dollar was positive at EUR 1.1 billion. Our truck, bus and power engineering activities made a positive contribution to sales revenue of EUR 7.2 billion, thanks to the first-time consolidation of MAN. And finally, sales revenue from our Financial Services division was up just under EUR 1.2 billion, bringing the total sales revenue to $95.4 billion for the first half. The increase in sales revenue was one of the key factors behind the improvement in the operating profit which increased from EUR 6.1 billion to EUR 6.5 billion in the first 6 months. As I reported on the Q1 call, the lower percentage growth in operating profit versus the percentage increase in sales revenue is in particular due to a significant purchase price accounting charge relating to the inclusion of MAN. Focusing on cars and light commercial vehicles first, volume, together with price and mix effect, came to a total positive of EUR 0.8 billion. Currency after hedging was a positive EUR 0.5 billion. Our continued discipline with regard to our product cost resulted in an improvement of EUR 0.9 billion. Fixed costs and depreciation increased by EUR 1.4 billion, reflecting the growth in our products and base as well as MQB related costs as we bring you our model portfolio. As highlighted earlier, the consolidation of MAN triggered a significant PPA charge. When combined with the difficult market conditions in the truck and bus sector which reduced the underlying earnings of MAN as well as at Scania, the group operating result was lowered by EUR 0.5 billion. And finally, earnings from Financial Services were up just over EUR 100 million. In total, the operating result at EUR 6.5 billion was up 6.7% on the first half of 2011. With this new chart, we would like to spend a little more time on the important contribution made by our divisions and to focus on the performance from our equity accounted investments. The Automotive division, comprising our car, commercial vehicle and power engineering interest, increased profits, before tax by EUR 1.7 billion. In addition to the operating result improvements previously outlined, the positive development in the financial result also played a key role. In the first half, mainly through our investments in China and indirectly in Porsche AG, the equity accounted result increased by just over 50%, of which our Chinese joint ventures contributed a pro rata operating profit of EUR 1.8 billion. The other financial result includes a further appreciation of EUR 2.6 billion in the value of our put/call rights, of which EUR 2 billion relates to Q1, excuse me -- Q2 alone with respect to the indirect holding in Porsche AG mainly driven by lower interest rates. Switching now to our Financial Services division which also includes the financial services activities of Porsche Holding Salzburg, MAN, and of course, Scania. Let's take a look at some of the key metrics. Sales revenue increased by 14% to EUR 9.6 billion in the first half, again, reflecting further volume growth. Operating profit grew by 22% to EUR 731 million, consequently. Profit before tax for the entire group increased 36% to EUR 10.1 billion for the first half. Now turning to the financial performance of our brands. For the first 6 months, the Volkswagen Passenger Car earnings were EUR 2.2 billion, up slightly on the prior year despite the upfront costs for MQB. Audi increased its earnings to EUR 2.9 billion, maintaining an 11.5% margin. Skoda recorded a solid result of EUR 449 million. SEAT was able to slightly reduce its losses despite the difficult whole market. Bentley reported a EUR 57 million profit versus a small loss in the same period last year. And our light commercial vehicles brand in a tightening market was able to improve profit slightly to EUR 242 million. Scania booked an operating result of EUR 477 million, utilizing its extensive dealership servicing activities to partially offset the decline in sales. MAN, also impacted by the decline in Brazilian and European markets, is included for the first time in H1, reporting a positive EUR 354 million before purchase price accounting. The other line includes the elimination of intercompany sales, the earnings of Porsche Holding Salzburg as well as PPA charges. For the first half, charges amounting to close to EUR 800 million for PPA have been booked within the operating result. PPA is expected to increase significantly in the second half to close to EUR 2 billion for the full year with the inclusion of further charges relating to the integration of Porsche. Let me now turn to cash flow in the Automotive division. Operating cash flow reduced from EUR 8.4 billion to EUR 6.8 billion, with the key driver being the movement in working capital, which in part reflects the inclusion of MAN, while the growth of our group was an additional factor. Golf levels increased by EUR 1.8 billion and are at a level that supports our sales network chain through the upcoming model changeovers specially with regard to the new Golf. Investing cash flow reduced from EUR 6.5 billion to EUR 4.8 billion, reflecting in particular the purchase of Porsche Holding Salzburg in March 2011. Excluding equity investments, cash flow in investing activities rose to EUR 4.4 billion from EUR 3.2 billion, reflecting upfront investments in our factories In particular with regards to MQB and the renewal of our product portfolio. The CapEx ratio came in at 4% for the full year. This is likely to rise above 6%, reflecting our continued investment in new products within the usual seasonality path. Staying with the Automotive division, net liquidity at the end of the first half was EUR 14.9 billion, down just over EUR 2 billion on the year end 2011. This reflects not only the EUR 1.7 billion outflow in dividends paid to shareholders of Volkswagen as well as to the minority shareholders in Scania and MAN, but also the significant investments in our future I just outlined on the previous slide. In addition, in Q1, MAN invested EUR 150 million in India to buy out their joint venture partner as well as concluding the transaction relating to [indiscernible] for EUR 350 million. In the second quarter, we invested a further EUR 0.7 billion in MAN for a total of EUR 2.1 billion year to date, thus increasing our stake to 75.03% of the voting rights and 73.57% of share capital. As we announced on July 4, we expect to complete the creation of integrated automotive group with Porsche shortly, we are with regards to the expected closing on August 1 in the final stages and we expect to achieve the closing next week. The expected impact on net liquidity is around EUR 7 billion being a combination of the consideration of around EUR 4.46 billion cash plus one share and the absorption of the negative net liquidity of Porsche AG expected to be around minus EUR 2.5 billion. And finally, before leaving the topic of net liquidity, just a mention that we completed the takeover of Ducati last week. The acquisition of this excellent technology-leading premium motorcycle manufacturer will lead to the outflow of approximately EUR 750 million in the third quarter. We are confident with our liquidity, together with strong cash generation, we'll provide sufficient flexibility to execute our strategic plan, irrespective of fluctuations in the capital markets. And so to conclude my presentation today, let me now turn to our outlook statement, which you can read in full in our half yearly report. While we expect continued growth in the global car market and in the remainder of the year, the pace of growth is expected to slacken. For the full year, we are anticipating a decline in the Western European market, although, the German market is expected to come in at the same level as last year. We expect the global car market for the total market for trucks and buses to lose momentum and the chance of a decline below the level of 2011 cannot be ruled out. Our key group strength is our unique brand portfolio and the accompanying management model which underpins it. We will build on this with the inclusion of Porsche, which we hope to complete next week. Sales revenue is expected to exceed the level of 2011, resulting in part to the consolidation of MAN. Expected contribution in full of Porsche Automotive business will have a relatively slight impact on revenue due to consolidation effects. The earnings contribution from MAN will be limited due to the PPA write-downs. High initial PPA is also expected to largely offset Porsche contribution to the operating profit this year. In summary, we aim to match the operating result achieved in 2011, with a result of EUR 6.5 billion in the first half. This indicates a lower result for the second half, reflecting the increasingly tough market conditions here in Europe and slowing growth elsewhere. MQB effects in the second half will also have an impact as we launch the next generation of the Golf and other key models. Ladies and gentlemen, a strong balance sheet, our improving cost structure, together with high flexibility in production plus our leading edge in technology and the strengthening product portfolio, while not forgetting the addition of the iconic Porsche brand in just a few days time, leads us to consider ourselves well prepared for challenges ahead.

Thank you very much, Mr. Pötsch, as we move now into the Q&A section of our call, can I please ask you to limit yourself to just 2 questions to allow everybody a chance within the time available. So let's now start with the questions of analysts. Thank you.

[Operator Instructions] We'll take our first question from Michael Tyndall from Barclays. Michael John Tyndall - Barclays Capital, Research Division: As it happens, I have 2 questions. The first one just relates to cash. If I'm not wrong, Mr. Pötsch, you suggested when you announced the Porsche transaction that your minimum cash level is now EUR 10 billion in order to keep the rating agencies happy. And if I look at what you finished the quarter with, EUR 15 billion and the EUR 7 billion basically going out for Porsche and a further EUR 750 million for Ducati, it seems to me as if you're going to fall below that EUR 10 billion. So I'm just wondering whether perhaps I have got the EUR 10 billion wrong or perhaps you're very optimistic about cash inflow in the quarter ahead. And then the second question, I'm sorry, it might be a little bit convoluted, but if I look at Slide #11, in fact 10 and 11 in combination, volume mix in price on my numbers was EUR 3.3 billion contribution to revenues in the second quarter, but only EUR 0.1 billion contribution to EBIT. And within that price was EUR 0.3 billion, so if I assume that price drops straight down then one of the other 2 or both of the other 2 are negative. And I'm just wondering if you could help me understand how a positive volume or a positive mix could actually turn out to be a negative for EBIT?

Okay. So you have 2 questions for us. The first question relates to our cash or our net liquidity, what we think is the right level for our needs and for our business. If you're assuming that, or referring to figure of EUR 10 billion of net liquidity as a basis for our business, is that still the case or what should be the right figure you should think of for the next couple of quarters. And the next question refers to our Slides 10 and 11, there you want to know how volume mix price actually then turns out to the [indiscernible] and how it rather compares between the first quarter and the second quarter. So if you can him some more details how this development can be explained. Hans Dieter Pötsch: So in the first topic in terms of net liquidity, it's very clear, we know we talk about medium-term targets. It's clearly something which is not to be met every day so to say. And first of all, it's very clear, the integration of Porsche will erase [ph] by the facts given. First of all, the money outflow; secondly, the integration of negative net liquidity of the operating Porsche company EUR 7 billion. So if we historically deal with the issue, we were historically always saying the world needs some EUR 5 billion net liquidity. We stepped up this number to some EUR 7 billion to EUR 8 billion as being absolutely sufficient to deal with operating challenges and refinancing challenges. And I said and I still believe that this is the right target medium term as the group continues to grow quite significantly. We'll also see this moving from 2012 to 2013 that we should target on net liquidity number of 10. To the second question in terms of the ratio between the volume respectively mix effect in price produced relative to EBIT development. It is, first of all, that in order to do an appropriate comparison, it's absolutely necessary to eliminate the PPA charge, because otherwise that's putting too much water into the wine. Now taking a thorough elimination at this point. One would find out that comparing the performance the group has turned up with in the first half with 2011, which you'll picture we're in relative terms operating profit to revenue in the first half of 2012 on the basis of an elimination of the PPA charge would come pretty close to the numbers we have shown up with in 2011.

We'll take our next question from Horst Schneider from HSBC. Horst Schneider - HSBC, Research Division: Two questions. The first one relates to hedging and currency gains. Could you maybe update us, what is your current level of hedging, particularly speaking for the dollar? And what is your open exposure then for 2013 and which level of positive currency gains can we expect in H2? Will it be on the same magnitude as in H1? Then the second question relates to your guidance. So you maintained your guidance, you say you aim to achieve the 2011 operating profit level. So this assumes in my view that you want to achieve an operating profit of around about EUR 5 billion in H2, so sequential downturn of, yes, more than EUR 1 billion in H2 versus H1. So I want to know if the guidance that you gave realistic guidance or would you call the guidance rather conservative?

Okay. So you have 2 questions for us. So the first one relates to hedging and currency gains, if we can give some more information about the current level of hedging especially with regard to the dollar and our exposure also for 2013 and if we can quantify the currency gains we probably expect in the second half of this year. And then the second question is relating to our outlook, if we can be more precise what is the outlook for the second half is a realistic guidance or a more conservative one. So if we can give you maybe some more information. Hans Dieter Pötsch: Okay. To the first question on hedging, first of all. As you were able to recognize in the walk down of operating profit for the first half, we were able to book a positive contribution coming from exchange rates including hedging. Now clearly, I think you are well aware that, by principal, the policy of Volkswagen is very conservative one, which means we are highly hedged short term. And then of course, in the future, the hedge rates have moved down somewhat which essentially means if you look at the second half of 2012. The open position is a little bit higher than the one in first half. Now clearly, what I have to state here if relevance is taken to the overall profitability. It's not only to dollar influencing the picture, we have a very significant basket of currencies where hedging is either not really possible or is just too expensive. So it depends on quite the number of currencies which can have a quite important influence. From what we can say from today's point of view, if we take the whole basket together, it should create another positive contribution in the second half of 2012, it would be a little bit premature to say on whether this would be more or less relative to the amount stated in the first half of 2012. In terms of the guidance for 2012, clearly, we grow guiding for a somewhat weak third quarter for the obvious reasons that we are just in the middle of a massive model changeover of very significant changes in a number of production sites and this clearly means that the P&L in the third quarter will be specifically hit by these effects. That's fully been taken into consideration when we established our guidance. And so far, I can say we are fully on track in terms of the actual performance relative to their part. What I probably should also add at this point is again, that Porsche is not going to contribute even on the basis of the full consolidation which we will do starting from the 1st of August. We'll not contribute any significant amounts to the operating profit in 2012 for the obvious reasons that there is a very significant PPA charge to be taken, and in a similar way, also MAN in the twofold consideration, one PPA charge; secondly, the operating performance being somewhat under pressure at MAN. So this is not going to be any significant contribution to our operating performance in the second half. Again, in a nutshell, we confirm that our goal for the operating profit in 2012 is to match the 2011 level and there everything is being taken under consideration. And we can say from today's point of view we are fully on track.

Our next question comes from Stephen Reitman from Societe General. Stephen Reitman - Societe Generale Cross Asset Research: Referring back to Chart #11 and the walk-through on the operating profit. The fixed costs and startup costs seem to have risen by about EUR 0.8 billion in the second quarter versus EUR 0.6 billion in the first quarter. You mentioned that you had some plant cost but also MQB. Has the MQB element actually accelerated in the second quarter? And also could you comment on -- are you suggesting as well that the cost specifically related to the Golf 7 launch are going to be taken in Q3 or are they falling in Q4?

For your question, so you are referring again to Chart #11 and you would like to have a little bit more information about the fixed costs and the amount of fixed cost and startup cost, and if he can provide some detail if the MQB charge in Q2 higher than in Q1 and how possible MQB course have been developed in the second half. Is that accelerated in the second half. And also with regard to the launch cost, how we see that in the third quarter and in the fourth quarter, if there's any difference to be expected. Hans Dieter Pötsch: On that side, clearly, what we have to expect and that's currently happening is an acceleration of costs coming up by all the changes to be done in production and manufacturing sides and also by the launch of new models that's what is pictured out looking at the numbers of second quarter. And we will definitely see a peak number in Q3 and still with a significant number in Q4, but the peak is expected to happen in Q3.

Our next question comes from Daniel Schwarz from Commerce Bank. Daniel Schwarz - Commerzbank AG, Research Division: I have one question on trucks, regarding the low earnings in trucks and specially the MAN profit warning. Do you think long term you need to have on the truck set exposure to the U.S. market or the ones have to be diversified geographically on the other side to have more leverage on the fixed cost and R&D cost in trucks?

Okay. So you have one question with regard to trucks and the MAN performance there. And that means that we need maybe a bigger exposure to the U.S. market, actually than to have a certain leverage on fixed costs and R&D costs. Hans Dieter Pötsch: So in order to deal with the most actual situation in the truck and bus business. I think first of all, it's fundamentally related to the economical framework which of course is somewhat more pronounced in certain regions compared to other regions. It clearly shows that the efficiency has to be improved. And that's why we feel very much confirmed with our fundamental ideas to form and integrate the truck group, specifically tailored to make use of significant synergies available. It's clear that in the very short term, it's mainly on the purchasing side with some of maybe R&D effects but a little bit medium longitude and looking it clearly will have a meaning for all the functions and it definitely seen to work with common modules and the likes. So a number of items which will clearly have a major impact on the cost side. I think the initiative is taken -- you're well aware that starting the 1st of September, there will be some management changes. And looking at the whole situation, I only can say that we are clearly executing a certain program and there is no reason just to hold back of that. Daniel Schwarz - Commerzbank AG, Research Division: That means you think you would not need to add exposure at some point, but are efficiencies that you find being set up as it is now? Hans Dieter Pötsch: No. U.S. is currently not an issue. Both companies, Scania and MAN are not having a presence there and that's currently not an issue.

Our next question comes from Bernard Donges from JPMorgan. Bernard Donges - JP Morgan Chase & Co, Research Division: So my first question is on [indiscernible] sales which are 13% in the second quarter. If we traded probably for China sales with are not consolidated, they are 10%. But on the other hand, when you look at your analytics of sales revenue, Page 10 of the presentation, the volume impact is EUR 2 billion, so it's like 5% year-over-year versus the 10% I mentioned earlier. So could you like please explain the difference? And my second question is on the drop through of revenues to EBIT, so I'm coming back on the question which was asked earlier by one of our colleagues, so you think that PPA was a big negative in the second quarter, but I would have expected PPA in volumes mix and price to be only closed by Porsche or Salzburg. And the main sources of PPA to be MAN and Scania, so can you please like elaborate a little bit on that?

So we have 2 questions. First, refers to our, the development of our sales of the group and then of our China business and how this then refers transfers to the sales revenue development if we can hear -- explain here the difference in the percentage -- percentages. And the second question is again how the revenue development and actually has to be seen in the EBIT line. And if you can explain a little bit or give some more details with regard to the PPA charge, if that is just the Porsche Holding Salzburg or how that's split up on probably MAN and Scania. Hans Dieter Pötsch: So maybe I make first some comments on the sales side in the general way before -- afterwards, we talk about the numbers in detail. It's very clear that the first 6 months of the year in terms of market have been developed differently as you know and as we have announced as well. So we have a Western European market, which has declined and which has even increasingly is declining momentum over the last few months. We have China, which has lost some of the momentum but in the passenger cars perspective still has a positive growth, you have seen that the U.S. is going up. Positively in general market conditions. We have seen in Brazil some effect due to the IPI, which is a tax, which has been changed in end of May and has given a rebound to this market which was negatively factored as well. And we have in India, a smaller growth than it was normally forecasted. Russia is still staying dynamic. So the market conditions are at once different the region's where you are and this market conditions we're playing. So a [ph] effect on that is the mix of the markets. The next one clearly is that we have launched our new small family which has an impact on numbers, but as well on turnover revenues per comp because these are the entry models, if you want so, into our brands and have immediately change of mix as well to the revenues. So I think that gives you a small feeling about how it's funding. In general, we need to be clear that the European market stays a concern and that we believe that over the next few months, or even over the next period of a certain time, it will continue to be pretty complicated. Hans Dieter Pötsch: The walk down and development of sales revenue first of all, just to make sure that we have the right understanding. In the EUR 5.7 billion contribution of volume and then price and mix, it's clear that the Chinese joint ventures and their volume are not included because we consolidate the Chinese joint ventures only in the equity line. So within the financial result. And if we eliminate China from that, it is just a 5.7% improvement compared with the basis which fits pretty much then to the development on the EBIT line specifically as I said before, if the PPA charge is eliminated. Now the PPA charge we were talking about before is somewhat more than EUR 800 million for the first half. And it only has to do to a little extent with the Porsche Holding Salzburg, the major effect coming from MAN and Scania at this point. So in this way, I think on a clean basis, we can say that the volume development fits pretty nicely through to the EBIT line.

Our next question comes from Charles Winston from Redburn Partners. Charles Winston - Redburn Partners LLP, Research Division: Just to let back this issue of the profit bridge. The drop through in the second quarter, as Mike pointed out, EUR 3.3 billion revenue, EUR 100 million on EBIT. As you've just pointed out the impact from Porsche Salzburg from PPA was relatively small. Then the PPA Porsche Salzburg was in for the full second quarter last year anyway. So I'm not following how adjusting for PPA in that element of the profit bridge, which, after all, excludes the charge business, what does that mean -- I mean, how is that impacted -- because even adjusting for PPA, I don't understand why we're still not looking at the EUR 3.3 billion revenue dropping through to a EUR 100 million profit.

So this question, actually, we have that already. That was again the explanation of the profit bridge and how we can explain there. Actually, the development and what refers actually to the PPA and how we can explain that a little bit better to you that you can follow the numbers here. Okay. Let's just take the next question, and then we give you the answer.

Our next question comes from Stuart Pearson from Morgan Stanley. Stuart Pearson - Morgan Stanley, Research Division: So 2 questions. Firstly, just on the change in provisions in the quarter. I'm sure you had a lot of questions on this today, but the -- it seems on the face that it's been reduction [ph] the first quarter around EUR 570 million. Am I right to understand that's a payment of work, bonuses and that's a balance sheet and cash flow movement or has that had any impact on the P&L at all? Has that provision release into the earnings stream? And so I wondered if you can confirm that, as my first question. I guess in the second question is something more general just your perspectives on the European market. And again, some of your peers in the industry today accusing Volkswagen of sparking a price war in Europe. I wanted to get your perspectives on what's going on the European environment, how aggressive VW is being on pricing [ph]. What do you think needs to happen or might happen in terms of capacity reduction in Europe and why Volkswagen seems to be again so coordinated approach to that [ph] in particular is calling for?

Okay. So you have 2 questions. So we start with the question, I guess, for Mr. Klingler. You want to have our, actually, impression or our expectation for the European market, how we see there the pricing environment and the situation in Europe at the moment and how that could development. And the second question refers to provisions. You are referring to the EUR 570 million change in other provisioning, so where does that come from. And is there any P&L effect from this?

So maybe I start first with the market in general then we'll come to the pricing. It is very normal that the customers do have, let's say, impression, over the actual economic situation. So if you are in Spain for example, and you are below 27 years old and you are not living in Madrid or in Barcelona, the probability of unemployment rate is more than, I would guess, was 70%. So we cannot deny that certain example that the European debt crisis is out there and that it is really touching the customers. Of course this is for the end customers as well as for the free customers. For the free customers, you've heard us, well, during several calls and several information that, for example, for the smaller companies, it's getting a little bit more complicated to get financing done, so they have a bit more issues to get the cars or the trucks on their balance sheet. So the debt crisis is out there, if you like it or if you don't like it. And it touches differently the countries. So Spain is certainly known, Portugal is certainly known, Greece is certainly known. Italy now is very much touched as well as we can see in the contraction of the market. So the market is going down heavily this year. We believe that it could continue because as well the austerity measures of [indiscernible] because it's the only one have touched the population. And particularly, the car has an item to get more tax into the pocket of the governments. So there have been changes in nearly all of our countries in Europe and increasing taxes on cars. So basically, what I wanted to say, the general conditions are complicated. The general situations are tough. And I stick to 2 examples, the Spanish market, we believe, will be on our record lows since probably 30 years, and probably not far away, Italy will be as well on this kind of very low situation. So if you are now a manufacturer being prioritized in the southern countries, of course, you get even more pressure because these are your own markets. And then if you're more concentrated on smaller cars as well, you have even the same situation increasing the pressures. I think that is important to understand that as a general remark, as you have seen, as well the result of some of our competitors and some of them are pretty strongly, I would say to influenced by the conditions. Even now come to pricing, it's pretty clear that under these conditions, the pricing situation is getting more under tension. We do not have the feeling that we are particularly aggressive, by the way, this is as well not the datas what we have. And we're always happy if some of the competitors believe that we are the most aggressive. Seeing their results and seeing our results or something should be really the contradictionary, because if you were more aggressive then Fiat probably, as an example, our results should be worse than them. And this is not the case. As a consequence, we do not believe that [indiscernible] them. So now we could come to the pricing in general. We are not the most aggressive in the market. Of course, we play in a competitive environment, and of course, we need to be better positioned. But over the last months, we see that our pricing situation has been reasonably okay. But of course, we see over the next months to come continuous pressure on the pricing level. So this will have an impact. How strong it will be, we shall see. It all depends on the market conditions in general under the circumstances which I have described.

Okay. And the question on the provisions released, this is only to confirm that this is related to the cash out and pay out of bonuses for employees, so there is no P&L effect coming out of this. And by the way, I should also say that, of course, there were also new provisions booked in the first half.

The next question comes from Fraser Hill from Bank of America. Fraser Hill - BofA Merrill Lynch, Research Division: It's Fraser Hill from Bank of America. I just wanted to kind of come through -- come back to this drop-through dynamic and maybe just look at it in a different way, specifically for Audi. If I look at the just the division of reporting, obviously, we had a well over EUR 1 billion increase in the revenue line in the second quarter, EUR 1.5 billion, in fact, and pretty much flat operating profit. So I'm just wondering if you can kind of talk us through the dynamic there, why is there being such a lack of operational gearing, and maybe kind of give us a little bit more detail on how pricing has affected Audi or whether that's been much more cost dynamic during the second quarter. My second question would be on MAN, you state in the release today that you're looking to increase your stake further depending on market conditions. I just wondered if you could sort of talk about that in relation to potentially proposing a domination agreement. Would that be purely through a domination agreement or would you continue to look to buy shares in the market? And in the terms of your ambitions for an integrated truck group, you don't mention your shareholding in Scania, and I'm just wondering why you might not be looking to increase your stake further there, if you can maybe kind of give us a bit more color on your stake holding in Scania?

You have 2 questions. The first one refers to the performance of Audi, if we can explain the development in the first quarter versus the second quarter. Is there a lack of operational gearing or do we have to face a certain effect coming from pricing for Audi? Can we explain that? And the second question refers to our shareholding in MAN and Scania, if we can give there an update about our plans if we do intend to increase our shareholdings in those 2 truck companies.

First of all, on the Audi side, very clearly speaking, with an operating return on sales of 11.5%. It's been a quite, in our view, a positive result, which comes very close to the performance achieved in the first half of last year. And in that sense, as you're well aware, our medium-term target is to stay in the bend between of 8% and 10% in terms of the relative operating margin. And that in itself demonstrates that we are operating pretty much on the upper end. So no claim about the operating performance at Audi. On MAN, we are not aware of statement, given we would increase the stake -- I think, since quite a while, we have a clear position, which is that we're keeping all options open and we definitely said that also includes a domination agreement.

Our next question comes from Frank Biller from LLBW (sic) [LBBW]. Frank Biller - Landesbank Baden-Wurttemberg, Research Division: Frank Biller from LBBW. I just have 2 questions. The one thing is on China. Maybe you can elaborate a bit on the Chinese development of the earnings increase in the second quarter to roughly EUR 1,400 per vehicle and that leads to a very high significantly high margin and maybe you can give us a glance what you're expecting for the next months to come here from the margin perspective. And the other question is on the Porsche impacts after the 1st of August. You indicated one of item of about EUR 9 billion are coming in fiscal year 2012. And my question is, the EUR 2 billion re-valuation in options, if it's going against these EUR 9 billions so that we have to add this or recalculate to EUR 7 billion or is it included in the EUR 9 billion? And maybe you can also say something about the tax rate in the second quarter if that was also related to the Porsche stake?

Okay. These are 2.5 questions, I would say. The first question is about China, if you can give a little bit more insight on how the development was in China with regard also to earnings margin development and how -- what is our expectation for the next month. The second question refers to the valuation of the put/call options we have seen in the second quarter. And is this EUR 2 billion on top we published today, if that also has an impact on the -- our valuation then for the current stake after the consolidation of Porsche AG? So you're referring then to the statement that we made the at the beginning of July, and if this number, you were referring to the EUR 9 billion, if that stands as it is or if that will change again. And you would be happy to have an explanation by the tax rate in the second quarter was so low, if that is also the reason is the valuation of the put/call options.

So one after the other. First of all, China. Margin and profit development very positive without any doubt. It's just in line with the comments we made in terms of the still positive market development. Maybe at this point, what we should say very openly is that while there is lot of talk in terms of cooling down in China, this is very relative because it is still -- the car market continues to grow. Yes, of course, on a slower path compared to previous years, but I think that was widely expected. And it's still quite undoubtedly [ph] a successful business model of what we are operating there. Now looking forward, it's very clear, as Mr. Klingler already pointed out, China is part of the global economy. There will be some effects certainly also with the relevance on the car market. But we are relatively optimistic for the second half that we will at the end of the year 2012 be able to say that this was another successful year in China. Medium-term looking, it is more a fundamental point of anything else, the question is on whether the biggest car market in the world can really continue in such a positive way or whether it will then take a few characteristics of other more developed markets in the world, and in that sense, of course, what we are trying to do is do the best we can in terms of improving our competitiveness. And that's clearly more easier to be done if we are the leading OEM in China. On the Porsche, what's going to happen after 1st of August. Now we said, in the press conference when we're talking about this event, that we will have to book another positive contribution to the financial result of around EUR 9 billion. We clearly stated the debt was on the basis of valuation parameters of the end of March then. In the meantime, there was another slip in interest rates which had 2 effects. First of all, the valuation of the Porsche put and call options on Volkswagen side came in with another very positive contribution for the financial result of the first half. And then clearly, if at the 1st of August the parameters of the 30th of June would remain the same, we would look at then instead of EUR 9 billion on positive contribution for the second half of our financial result of EUR 11 billion. Let me say very clearly that there are EUR 2 billion on top of the formerly EUR 9 billion, but not EUR 11 billion on top of EUR 9 billion. That would be wrong. On the tax rate stated, the playing rules in IFRS accounting is that we have to apply during a business year the planned tax rate for the full year. And clearly, as there are a number of nontaxable elements in our plan for the full year 2012, it brings down the tax rates to very low levels. That is the fundamental reason. And of course, it has to do with the Porsche consolidation.

As we are running out of time, I would really like to ask you to raise one question only now.

Our next question comes from Robbi Friar [ph] from Exane .

I'm Robbi Friar from Exane. My question is regarding the MQB. So obviously, going forward, the deployment is going to improve your production efficiency. I assume that it should free up capacity and lower the utilization rate in your European plants. If so since demand is continuing to fall in Europe, what do you intend to do or are you going to proceed with the new restructuring? How do you intend to address this?

Okay. So the question refers to the MQB and actually the savings and productivity and if that means that we have capacity available in Europe. And what do we do if demand falls in the next -- in the future? Hans Dieter Pötsch: Well, let me first of all confirm that we are fully on track with our MQB modular toolkit introduction. So while -- not really surprising in the last few months, we have vastly talked about the negative impact in terms of ramp-up costs, installation costs, CapEx and the like. Of course, we are very much looking forward then appreciate the advantages coming out of the MQB model, a toolkit in the range [ph] that we are fully on track with the installation. So very clearly, the MQB, the system will offer very significant productivity gains, which we will enjoy once we have succeeded in ramping up the volume to a certain level. But this is anyway absolutely necessary because we currently operate our plants with a very high utilization rate. If one applied international standards for capacity utilization, we were clearly more than just at full use of our capacity. So this is clearly needed, first of all, of course to incorporate additional volume; and secondly, also to normalize the situation and the one in the other situation. In other words, speaking. Currently, the situation is such that if we look at time accounts, then there is a significant number of employees, who have the time accounts pretty much full. We have, in addition to employees, significant number of temporary workers still heavily employed. And of course, if we needed to go any further, there is a big number of variants in terms of shift models and the like. Nothing of such is currently under consideration. I'm only saying the MQB modular toolkit will also contribute to something which is a very valuable asset, which is flexibility.

Our next question comes from Jose Pasmende [ph] from Peter Bank [ph].

Just coming back to the profit bridge and the product cost. I'm just wondering if you could please maybe elaborate a little bit around this category and sort of what are the dynamic that moved this cost savings. And also, is there a chance for product costs to accelerate in the second half, offsetting to a larger extent the incremental fixed cost or maybe in other words, can we expect the net impact from product cost and fixed cost would not be substantially different in the second half versus the first half?

Okay. So your question refers to the product costs, our savings we achieved in the first half and what do we expect in the rest of the year. What are the dynamics for those cost savings and will they be offset in which relation to the development of the fixed cost? Hans Dieter Pötsch: So first of all, if you look back, I intend to say almost traditionally after the first half, we receive, by system so to say, a positive impact on that side because the number of contracts renewed and then being effective with plan [ph] would kick in only then. So that's a more principal point. Of course, as we all know with the introduction of new modular toolkits, we more or less start to gain from the beginning. But it's clear that this is not going to have an overwhelming effect on the cost performance in the second half. So what we can state at this point is that of course also related to the situation of clearly fierce competition, the market's being much more challenging than ever before. Our aim is, of course, to improve the cost position as much as possible. Now this is supported to some extent by the most recent developments also, for example, on the raw materials side, where with a few exceptions, [indiscernible] for example, being one of these exceptions. The playing ground is more positive than what we have expected. So there is a good potential also in that area. And of course another element is the improvement in the overall productivity. So we think from today's point of view, we should be able, in the full year 2012, to significantly beat the number of cost savings of 2011. But we also clearly have to expect the fixed cost side of the business going further up on how these 2 elements relate to each other is something where we need a little bit more evidence going forward.

Our next question comes from Christian Breitsprecher from Macquarie. Christian Breitsprecher - Macquarie Research: It's Christian from Macqurie. I have a question relating to the situation in Brazil not on the truck side, on the passenger car side. For some competitors like Ford, we've seen some pretty green profitability; numbers. Coming from Brazil, can you give us some idea what's going on in that market at the moment also in terms of pricing and profitability?

Okay. So your question is about Brazil, especially the passenger car market, if we can give you some more information on the situation with regards to pricing and profitability, what development do we see there. Hans Dieter Pötsch: So the Brazilian market in 2012 started a little bit more shaky. As the general situation, economically spoken, has seen a lower development on the PIB as original forecast. So we talk about the gross rate which is between 2% and 2.5%. And if you compare that to a gross rate DSP 4 which fall between, let's say, 3.5%, 4% to 6% that shows already some of the evidence. On the other side, what was seen as well is that some tax changes has been given. And therefore some of the positive schemes like this IPI reduction, which has already existed in the years before not in the whole years, but in several part of the years, these positive effects haven't been down. Thirdly, as we have reported several times, the competitive environment in Brazil is increasing. We see more and more competitors coming into the country with our own plans and we see as well that these competitors have to be taken serious. Then we have seen changes in the imports duty regulations which adds some impact from the markets, started more or less end of last year, giving essentially for and input outside of -- make it a little bit easy to the South America, pretty hard tried to get them imported into Brazil. So a lot of situations which show as well that the competitive pressure is existing. On the other side, we have prepared to launch of a new goal. A new goal is now -- by the way, I think it was posted yesterday, our launch event, so we are now fully online and we see as well that the IPI change which was announced in the end of May has had an immediate positive fact on the total market. And I'm happy to say that we have been taking, as well here, a lead in that development. Maybe just to add one thing, the financial situation of the end customers in Brazil used to be, let's say, much more easy at certain time than it's today because the interest rates have gone up and delinquency rate as well for the banks have gone up. So maybe you remember about 3 months ago, the banks have -- the national banks have reduced interest rates but the banks have not reduced interest rates, because as I said, we are not ready for this due to the delinquency rates, which has grown up to 6%, 7%, 8%. So it means for these customers, of course, financing is very important, if they don't get too better results, it's more complicated to buy a car. So pricing situation now for us was in the period of the last 6 months, pretty reasonable. We have not been disappointed concerning that, but we have to admit that the situation is at it was and as it will be very competitive.

We'll take now the last question of an -- from an analyst and then we answer the open question from Charles.

Our next question comes from [indiscernible] SQR.

I have a question regarding the profit walk-down in the first half and then second -- and the first quarter, we have EUR 1.4 billion negative number given for the fixed cost, large cost aggregate and the fixed [indiscernible] negatively in the first quarter, could you give us any details of what are the biggest parts in them and especially what is the amount of depreciation and amortization increase in these 2 figures?

Okay. So we have the question, which refers to the amount of fixed costs and start-up costs of EUR 1.4 billion in the first half and if you can give here more details what are the biggest parts in there and what is actually the amount of depreciation and amortization. Hans Dieter Pötsch: So that's about -- 40% is amortization, depreciation, and off the remainder, roughly 50% is MQB.

Okay. So we take now the first question from journalists before we come to Charles's question. So can we take the question from the journalist, please?

Okay our next question comes from Krista Frall, from Dow Jones.

Just a quick follow-up, please, on the purchase remark on plants utilization. Can you maybe give an indication on the average utilization rate of your plants across Europe currently? And assuming obviously that you are operating profitably in Europe, what sort of profitably level are we talking about here? Is this like a solid profit level or just about break even level?

Okay. You have the question about our capacity utilization, if we can give your precise number, so what is the average rate across Europe. And what is -- if you can give more guidance with regard to our profitability in Europe. Hans Dieter Pötsch: In our internal calculation, the average plant utilization level is at more than 90%. As I said, before applying international standards is even more. And we can confirm that the profit level is solid in Europe. And if I may have this opportunity just come back to one of the question of the analyst before, that was on the evolution of our operating profit in the second quarter compared with the first quarter in terms of effects coming either from volume mix or price. And just say that in the second quarter, the operating result is affected by negative mix effect due to the weakness in the South and partially Western Europe. And of course also in terms of product mix by the introduction of the new top model which, let's say, that is at the entrance level of the model range of Volkswagen.

So now we have one question left if I see that correctly.

Our next question comes from Chris Bryant from the Financial Times.

Just a quick question on Suzuki, if I may. Is there any update on the situation regarding the arbitration? Clearly, the last few months, the Suzuki have not been very fun. Your investment there doesn't seem to be nearly successful as it was in the past. Have you had a change of heart about what you're trying to do with the Suzuki stake in light of these developments and also a press reports that you plan to deepen the tie up with [indiscernible]?

Okay. So your question is about Suzuki and if we can give there any update or if we have any -- if you see any change in our strategy. Hans Dieter Pötsch: Well, the situation is good complex because due to the situation that we are involved in, in arbitration process, we can, due to confidentiality obligations under the applicable law, not comment on any status. Sorry for that.

Okay. Thank you very much for attending that call and for your questions. So enjoy the rest of your day. Good bye from here from Wolfsburg.

That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.