Christine Ritz – Head of Investor Relations Hans Dieter Pötsch – Head of Finance and Controlling Christian Klingler – Head of Group Sales and Marketing

Daniel Schwarz – Commerzbank Horst Schneider – HSBC Adam Hull – WestLB Jochen Gehrke – Deutsche Bank Thierry Huon – Exane BNP Paribas Stefan Burgstaller – Goldman Sachs Michael Tyndall – Barclays Capital Jose Asumendi – RBS Stuart Pearson – Morgan Stanley Arndt Ellinghorst – Credit Suisse Fraser Hill – Bank of America Chris Bryant – Financial Times

Ladies and gentlemen, welcome to Volkswagen conference call on the results for the period January to June 2011 based on the ad hoc and the financial report, we published this morning. Joining me today are Hans Dieter Pötsch, Member of the Board of Management Volkswagen AG responsible for Finance and Controlling, and Christian Klingler, Member of the Board of Management Volkswagen AG, responsible for Group Sales and Marketing. You can follow the webcast and download the chart from our website www.volkswagenag.com/ir. Questions can be sent by e-mail or called in. Following the presentation, we will first take questions from analysts, and then at the end, we will make sure there is time for questions from journalists. Let me now hand 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. During the first half of 2011, we’ve made notable steps towards the goals of our Strategy 2018. We delivered more than 4 million cars for the first time, growing at 14.3% nearly twice the rate of the global market. This drove sales revenue up 25.8% with operating profit more than doubling to €6.1 billion. Profit before tax increased substantially by €5.6 billion to €8.2 billion. There are three main drivers here. Firstly, the underlying operating performance; secondly our equity consolidated companies, which include in particular our Chinese joint ventures and our participation in the operating business of Porsche, reported excellent figures. And thirdly, the valuation of the put and call rights with respect to Porsche Zwischenholding had substantial impact. Automotive net liquidity at €19.4 billion remains at a high level. On 9th of May, we announced that we had increased our stake in MAN through the 30% threshold of voting rights and triggered a mandatory offer for remaining shares. This debt was prerequisite for setting aside antitrust restrictions while maintaining full flexibility for a future tighter combination of our truck interests. We are very pleased with the result of the tender offer, and the objective of achieving substantial synergies is moving closer. We will continue to work expeditiously in close coordination with the relevant authorities towards obtaining the required regulatory approvals, globally and remain confident of achieving settlement of the offer within the second half of 2011. We will come back to the operational points in more detail later on. For now I would like to hand you over to Mr. Klingler, who will provide a little more color to our sales performance. Mr. Klingler over to you.

Thank you very much Mr. Pötsch. Ladies and gentlemen, a warm welcome to the conference call from me also. The first chart shows the development of the world car market by quarter in comparison to the same quarter of the previous year. Growth recorded last year was mainly due to recovery of the economic environment on the one hand and government support measures in many markets on the other. In some markets, the supported measures expired last year, which explains the declining growth rates. Therefore, on the quarter-by-quarter comparison, we see that the global market lost some of its growth momentum in the second half of 2010. Despite of high comparison base from a year ago, the global market recorded further positive growth rates in the first half of 2011. However, in order to evaluate the relative development of the global markets, comparison to the last normal year of 2007 is appropriate, as the next chart shows. The positive influence of the government support measures in many markets led to a significant market rebound in the second half of 2009. As incentives in many European countries were phased out, the rebound continued on a slower pace through 2010. The first three quarters of 2010 were still slightly below the normal year of 2007. However, more favorable economic conditions in the major markets, as well as a strong increase of demand in China and India contributed to an overall stabilization of the global car market. And this strong fourth quarter 2010 was due mainly to further improving conditions in major European markets plus the strong Chinese market in the final quarter, as major sales incentives approached the end. In early 2011 the markets lost some of the positive momentum, as some of the merging economies increased interest rates in order to prevent the economies from overheating. Some supportive programs for example France were phased out. Conflicts in the Middle East and North Africa, as well as the situation in Japan resulted in some negative impact for the market. In addition, the industry struggled with supply shortages due to the disruptions in Japan. As a result, the market growth slowed in the second quarter. For the second half of the year, we expect some relief in the supply chain, as the Japanese industry is gradually recovering. Despite higher oil prices demand growth is still evident in most regions of the world. For 2011, our latest forecast suggests the global market will remain well above the pre-crisis level of 2007 up to maximum of 6% higher than 2010. In the second half of the year, the projected growth rate in the major growth markets are likely to decline. However we are confident that in the year 2011, the global car market will reach an all time record level. If you go to the next chart, the first half of 2011, our deliveries to customers have shown double-digit growth again. Volkswagen Group again outperformed the overall car market in the first two quarters of 2011. We continued to gain global market share in the first half of 2011 supported mainly by the Group performance in China, in Russia, in India as well as in Germany and of course in the United States. As you go to the next chart, you can see the market performance of the regions around the world in direct comparison to the performance of the Volkswagen Group in the first half of 2011. With the expectations of Central and Eastern Europe as well as South America, the Volkswagen Group has outperformed the market in all other regions worldwide. In Central and Eastern Europe, we increased our market share in many markets, including Russia. The remarkable growth of the Russian market led to further increase of its relative importance within the region. However, as our market share in Russia is below the Group's, regional leverage. The overall market share in Central and Eastern Europe declines that is so called base effect. In South America, our market share declines slightly the Brazilian market increased in relative terms more than our deliverers. Currently, the competitive situation there is very tough, with new players in the market on one hand, and some supply shortages due to strikes and cohesive in the second quarter and the other. In Western Europe, despite the market contracts have 2.1% the Volkswagen Group recorded, the positive results, as we achieved an increase in our deliveries of 7.1%. As already mentioned, some of the major markets in the region still suffer declines. Following the end of support measures, in general weak economies. In particular, the Spanish and Italian market contracted heavily by 26.8% and 12.5% respectively. Now, we will have a look at the performance of the individual brands of the Group. The first half of 2011, or our volume brands achieved an increase in terms of sales and for the group total deliveries to customers exceeded last years level by 14.3%. First on patents of cost deliveries were up by the impressive 11.8%, to more than €2.5 million cost, driven by strong demand in China, in India, in United States and Russia. Audi deliveries rose by 17.7% compared to last year to 653,000 cars. Skoda expanded deliveries up to 455,000 cars mainly due to the strong demand in China and Russia. SEAT, as well as Bentley have also managed to expand deliveries. Volkswagen Commercial Vehicles and Scania have benefited from the improving economic conditions in some of the major markets. As development, in the truck segment is closely tied to consumer demand. Whereas also if you look, a few highlights on some of our new models, which will provide a good base our sales performance in the coming months. The Volkswagen Golf Cabrio is the Golf among the convertibles. Excellent quality, sophistication in design and looks, latest technology and the driving pleasure of convertible. Together, we’ve all around the economy and complete every day practicality. Shown at Geneva Motor Show, the Volkswagen Golf Cab was introduced in the markets last month. The new Volkswagen Beetle Coupe is last of Volkswagen with one of the kinds history and high appeal for young and trend trendsetting customers. The Beetle combines emotional heritage with future of Volkswagen. Introduction in market targeted soon this year. The Audi Q3 is sporty progressive SUV for active modern and urban lifestyle developed for new demands. The Audi Q3 had it’s world premier in Shanghai in April this year, and will hit the roads in the fourth quarter 2011. Then the Volkswagen new Crafter with its new engine and the ensuing excellent fuel consumption figures stands for economy, robustness and reliability. It is therefore the ideal vehicle for the toughest jobs and projects. The new Crafter was introduced in the markets last month.

Thank you Mr. Klingler. Now I’m going to switch back to Mr. Potsch for some more details on the key elements of our financial performance. Hans Dieter Pötsch: The first six months of 2011, sales revenue increased by 55.8% to €77.8 million. Higher volume was the main driver of the revenue gain at €12.6 billion, which also reflects the inclusion of Porsche Holding Salzburg from March 1. Pricing improved by €0.2 billion for the first six months mix including both product and country mix contributed €1 billion to our performance. As we commented previously exchange rates are starting to turn, came in at a net negative €0.1 billion down from a plus of €0.6 billion as of the first quarter. Scania reported a €1.1 billion improvement in revenue over the first half of 2010. Our financial services division also improved up €1.2 billion. Increase in sales was again the major influence in an improvement in the operating result from €2.8 billion to €6.1 billion versus the first half of 2010. Volume together with price and mix effect came to a total positive of €3.5 billion with Q2 contributing €1.3 billion reflecting a raising basis effect. Key drivers were not only volume and the inclusion of Porsche Holding Salzburg, but also a higher mix of cars and a richer equipment content. As in the first quarter, currency was a net €0.2 billion headwind mainly due to the US dollar and the British pound. Our global sourcing activities in combination with long-term contracts and hedging operations as well as the progressive implementation of our tool kits are offsetting the trend of rising commodity prices. First six months, we were able to reduce our product costs by an impressive €0.5 billion. Fixed costs and depreciation increased by €0.8 billion as we continue to ramp up the additions to our production network and invest through higher engineering costs in our future. Scania, including the effects of PPA, translated the rise in revenue to an increase in earnings by a further €0.1 billion, which comes on top of a very good performance in 2010. And finally, our Volkswagen Financial Services division added €0.2 billion. To sum up, our operating results more than doubled €6.1 billion. Let me now turn to cash flow in the automotive division. At €8.4 billion operating cash flow was up 16% over the fast half of 2010. On the investment side, cash invested increased to €6.5 billion, which includes €3.3 billion for the purchase of the Porsche Holding Salzburg activities, as well as the stake in SGL Carbon as we announced in the first quarter and the increase of our voting rights in MAN to 30.47% in the second quarter. Excluding one-offs, cash invested increased from €2.6 billion to €3.2 billion. Allow me to note here that further cash outflow of €3.4 billion for the increase in our stake of 55.9% of the voting rights in MAN is contingent on approval of the antitrust authorities which as I already mentioned. We expect in the second half of this year. Our CapEx ratio at 3.7% was slightly over the 3.5% recorded last year as we continued to invest in our future, in particular into the MQB toolkit. As the year progresses, we expect the ratio to rise closer to our 6% guidance. Total net cash flow over the first six months for the automotive division came in positive at €1.9 billion. Net liquidity at €19.4 billion is up €0.8 billion on the year end 2010 figure even taking account of the investments I mentioned previously as well as the €1.3 billion dividend paid to our shareholders in both Volkswagen as well as the minority shareholders of Scania in the second quarter. This strong financial foundation supports our steps along the strategy 2018 path, and ensures we have adequate liquidity to pursue the goal of an integrated automotive group with Porsche in combination with a strong financial rating. Now let me turn to the financial performance of our brands. The Volkswagen passenger car brand posted earnings for the first half of just over €2 billion more than double the prior year period. The brand achieved an impressive 4.5% margin. Audi continues to go from strength to strength, doubling their operating result to €2.5 billion and reporting an excellent 11.8% margin for the first six month. Skoda also posted an excellent margin for a volume manufacturer at 7.7% earnings almost doubled at €412 million. : In addition, since March 1st the results for Porsche Holding Salzburg net of PPA charge are included here too. Volkswagen financial services reported an improved result of €553 million up over 50% resulting from a higher number of contracts and an expansion of activities. Combining the Automotive and Financial Services divisions gives a total operating profit of €6.1 billion for the first six month. This brings me to the financial result, which for the first half came to a positive €2.1 billion. Here, I would like to spend a little time going through the performance of the, at times quite volatile and hard to predict key drivers. To begin with just a short reminder that here we include the results from our equity accounted investments, changes in the valuations of derivatives as well as interest related costs. The companies reconsolidated equity recorded a strongly positive results reflecting the excellent performance of our Chinese joint ventures, which reported a proportional operating profit of €1.2 billion as well as our 49.9% holding in Porsche Zwischenholding, after PPA reported a clearly positive net result for the first half. The respective put and call rights with regards to our plant integration with Porsche valued as with any derivative instrument on a regular basis. At the end of the first quarter 2011, this valuation stood at a positive €1.4 billion, that’s €400 million lower than the year-end valuation mainly as a result of a higher discount sector due to rising interest rate. Evaluation has now increased to €3.9 billion primarily based on stronger underlying earnings projections for Porsche AG a likelihood of achieving a decision to merge within the timeline of the comprehensive agreement has, in our estimation remained unchanged at 50%. The net impact from valuation in the second quarter financial results is therefore a positive €2.5 billion giving a mid-positive €2.1 billion for the period generate to June 2011. Finally the other financial results also includes a mark-to-market valuation of interest rate exposure in our currency hedging instruments, this effect amounts to approximately €700 million negative on a group-wide basis and is a temporary non-cash effect due to the spot hedge accounting method we apply in our currency hedging. This technical effect will reverse entirely before the expiration of the respective hedging contract. Now before concluding today’s presentation allow me to just spend a moment commenting on the status of the moves to form an integrated automotive company of Volkswagen Porsche. The preparations for the planned merger of Volkswagen Porsche are progressing on schedule. The required extraordinary general meetings of Volkswagen and Porsche are scheduled for December 2011. A joint merger auditor has also now been appointment by the Stuttgart Regional Court. The legal and tax hurdles have not yet been cleared. These relate in particular to the ongoing proceedings or actions against Porsche SE in Germany and the U.S. due to alleged market manipulation and to potential changes resulting from a new umwandlungs-steuererlass, which is best translated as the taxation of reorganization circular. However, the draft of the new rules is now available on the basis of this draft, we expect to reach a suitable outcome with the relevant tax authorities. Overall, we continue to believe that there is a 50% probability of the general meeting resolutions required for the merger of Porsche SE with Volkswagen AG being adopted by the deadline of the end of 2011 as stipulated in the comprehensive agreement. Board of Management expects to make a final assessment of this matter during the course of September this year. We are also preparing for the eventuality that a resolution on the merger will not be adopted this year. One of the issues to be addressed is how to fully integrate Porsche operating business into the Volkswagen Group. In this case, Volkswagen is entitled to acquire a further 50.1% of the shares of Porsche Zwischenholding, and therefore indirectly 100% of the shares of Porsche AG by exercising call option at defined states in spring 2013 at the earliest. Board of Management will hold talks about the related issues with all parties involved. We remain committed to the goal of creating an integrated automotive group with Porsche irrespective of the approach that is ultimately adopted to achieve this. To close my presentation today, I would like to make a few comments on our outlook, which you can read in full in our half-year report. Volkswagen Group's key competitive advantages are its unique brand portfolio and its continually growing presence in all key regions of the world. The modular toolkit system will have an increasingly positive effect on the Group’s cost structure. Second half of 2011 Volkswagen Group’s brands will once again introduce a large number of fascinating new models to the market that’s further extending our strong position. We expect that the Group deliveries will exceed the prior year level and that sales revenue and operating profit in 2011 will be significantly higher than the previous year. The continuing volatility in interest and exchange rate trends and commodities prices will weaken the positive volume effect. Disciplined cost investment management and the continues optimization of our processes remain core components of our strategy 2018.

Mr. Potsch. Thank you very much. We will begin with the questions in another part of today conference call starting first with the questions of analysts.

Our first question today, comes from Daniel Schwarz of Commerzbank. Your line is open, please go ahead. Daniel Schwarz – Commerzbank: Thank you. First question is on Volkswagen brand, the margin sequentially slightly decreased for this first quarter, while all other units improved sequentially. Maybe you could elaborate which were the negative factors that hit Volkswagen brand more than your other brands. And maybe same question, you could clarify in how far lower provisions or a change in provisions contributed to earnings or to the stated earnings in the second quarter. And last question on FAW maybe you could give an update on what your plans are, how far your negotiations are to increase to 49% and what the potential financial impact of that could be?

Okay, thank you, very. Daniel, you have three questions for us, and I guess Mr. Potsch will be happy to answer those questions. So the first question is related to the Volkswagen brand , and if you can give some more details on the performance and on the margin development in the second quarter of the Volkswagen brand, which effects have we seen there? The second question refers to provisions if we have seen any significant change in provisions or if any change in provisions contributed to our earnings . And the last question refers to our China business if we have any plans to increase our stake to 49% in our joint venture FAW and if there if we can quantify a possible financial impact. Thank you Hans Dieter Pötsch: So to the first question, on the marginal Volkswagen hasn’t be cars, first of all let me say just to make sure that we have the same figures on the table there is a difference of one, tenth of a margin between the first and the second quarter. And honestly speaking, I think, I mean of course, there are number of reasons, but I don't think it's any elementary change of the performance of the Volkswagen passenger car brand. I think it's clearly to say that the momentum is positive for the remainder of the year. Of course, we are always well advised to look at the framework conditions at the framework conditions , and I don't have to say and I do not want to repeat everything which you can read every day in the newspapers, because we all know it, the framework conditions are volatile, difficult to be judged by all the various debt crisis, which are in place. But as far as we have influence on the ongoing business I can say we are fully on track at Volkswagen passenger cars and we are looking at another good performance for the remainder of the year. Then this leads me to the second question on provisions. And possibly there is some link to the position in our P&L other operating income, which might have fueled this kind of consideration. So may be I take a minute to quickly explain the connections there. First of all, I think it is important to recognize that if we get started with the P&L position as a comprehensive income that this is only to some extent driven by the release of the provisions. There is a significant effect coming by our currency hedging for example. And if we look at the first half there is a significant positive effect included in terms of currency effects which are reflected. There and in a similar way there are also a quite higher earnings included, which do come from commodity futures transactions. Of course, there is following the regular terms that if the basis falls away there is also a part which is related to the release of provisions. Now, it is important to note here that the building of new provisions of course is regularly done by the various functions in the Group, the Volkswagen Group. And I think there is a good proof to that if you take your time and look at the balance sheet which tells you the true story. If we look at the positions of other provisions sitting there and you will recognize that there was a significant buildup of provisions in the first six months and also in the second quarter 2011. So to cut a long story short no support of the operating performance by the release of provisions. Third question is a question I cannot answer as being asked because clearly and we recognize that there were a few rumors flying around that we are in, we are or seem to be in negotiations for increasing our stake in our joint venture in China with FAW. Now let me say very clearly, the core of our undertaking is that we have a very long standing relationship with both of our Chinese joint ventures and this is not really related to the amount of shareholding we have there, so we don’t see any direct consequences by this question, that’s why we will concentrate on building up again on this partnership.

Thank you. Let’s take the next question please.

Our next question today comes from Horst Schneider of HSBC. Your line is open. Please go ahead. Horst Schneider – HSBC: Yes, good afternoon, Horst Schneider here from HSBC. I've got three questions if I may. The first one relates to the operating business and I would like to get an update about the average delivery time now for your fleet. I remember to the last call you have explained again that you have got a great order book and for some cars you need to wait even more than half a year. I would like to get a number which maybe can tell us what is average delivery time for your fleet? And then I would like to get an update also on the production planning for Q3 and Q4. I could imagine in Q2 you were still impacted by Japan, so I would like to know if in H2 maybe the production volumes could be even higher than in Q1, also having in mind that you ramp up the Chattanooga plant in the US. And then another question relates to Porsche, and here I would like to know again what is the prerequisite for the merger, so have we got to see really a statement from the prosecutor in Germany by September, and if not would that destroy here the merger thought. Thank you.

Okay thank you Horst, you had three questions for us. The first question I guess is an issue for Mr. Klingler the topic relates, you are referring to our delivery time if Mr. Klingler can give you an update on how are the delivery time at the moment, what is here the average of the fleet or how big, how strong is the demand. The second one and the third one will be answered by Mr. Potsch. The first one, first to the production, our production planning our production planning in the third quarter and fourth. If we do expect higher production volumes production volumes in the second half, may be also due to the ramp up in Chattanooga . And the last question refers to our planned merger with Porsche. If we do expect a statement or some news from the Public Prosecutor in Stuttgart by September or how is our judgment there, what are our expectations?

Okay, so it’s greater time for the first question. First, maybe it’s important to understand the delivery times are important in the markets where we have cars to be build and no car stock, well does it mean for example in the United States the United States if people are not waiting for the cars they buy in the cars which in the stock. So you are referring probably to the delivery times in Europe, in the majority of these countries we do have cars to be to the demands of the customers. We do not have average delivery times for the cars, because we do have a lot of cars which are pretty fast ready which means six, eight weeks, 12 weeks, but still there are other items on the cars where we have issues which can have a delivery time more than four, five, four, six months. The order book is still strong, we are still on a very good level. Order intake is still positive; we are still in a positive level as well. And we are doing everything to reduce our delivery times over the next three to six months. In general, I think the Company has done a great job in comparison in connection sorry, to the Japanese issues. We have not lost production in an important amount. We just continue to have a very good demand situation of our customers due to the very good products. Horst Schneider – HSBC: Sorry, so that means you expect also a restocking in the next few months, if you say you would like to reduce delivery times?

Again, to be we expect that due to the stock situation now, we have maybe to discuss differently per region. But in some of the regions, yes, we believe that some stocking would be a positive impact for our customers, not to wait too long for the cars, for example in China, or as well in some of our in Europe. Horst Schneider – HSBC: Okay, thank you. Hans Dieter Pötsch: On the second question, regarding production in the upcoming quarters and maybe consistent then with the comments of Mr. Klingler. We first of all say on the basis of still strong demand and high order backlog with a too long delivery times partial under-stocking, we took a decision for this summer to as far as the most important plans are concerned to stop close down the plans during the summer time completely but to continue in most of the plans with the production and this is also going to continue on in the third quarter where already some Saturday shifts have been agreed, for example in Wolfsburg for the Golf Tiguan and the Touran. And of course the same implies also for Audi. The other point is that in the second half some additional capacity will go on stream. And you already made the point of Chattanooga. That's of course one area traditional big capacity. Also in terms of producing a new car and we also will have some additional capacity in the China available. Then so hopefully we can take a little step in terms of normalizing the situation that from today’s point of view it remains unlikely that we will reach what we would define as an ideal stock level until the year end. And to the third question, which importance were how we would see any intended statement by the prosecutor at Stuttgart making a several Porsche issues. Now first of all let me say that of course we do not have any transparency on when and how and with which result the prosecutor might open up this opinion to the public and in terms of the relevance for the merger process and I think it’s important to say that there are a number of issues where we need to compare to the most recent status progress. And that is why I think it is difficult to say, without talking pretty long on this, whether any single one any single issue could contribute to the fundamental judgment, whether a merger could happen 2011 or not.

Okay. Next question please.

Our next question today comes from Adam Hull of WestLB. Your line is open, please go ahead.

Adam, can you hear?

Adam Hull of WestLB, your line is open. Please ask your question. Adam Hull – WestLB: Hi, Adam Hull from WestLB. Three questions, if I may? The first one is on the VW brand margin. Just to get a feel for the impact of the startup costs on Chattanooga and when obviously that comes on full stream into next year. Just to give us maybe the feel of when, which quarter you would expect perhaps the worst negative of that and when you would expect that at a normalized rate, when we look at the VW brand margin? And secondly, you talked a little bit about the benefit of FX hedging. Maybe you could give us some indication of what the scale of the FX hedging in a quarter at the moment is benefiting, relative to the spot FX rate now? And I understand you are saying that you are provisioning for that, so it's counted, but if you could give us a bit more detail? And then finally on the Chinese business, could you just update a little bit on the recent conditions, from your perspective? And also could you just tell us what the dividend will be this financial year, from the Chinese JV? I think that comes through in Q3 or so. That would be great, thank you.

Okay, thank you, Adam. You have three questions for us. So the first question is again about the margin of the Volkswagen brand and if we can give here some more details of a possible impact of the startup costs of our brand in Chattanooga. If that, when will that hit most the Volkswagen brand with regard to the margins? And then, the second question was, with regarding to hedging and scale effects related to FX. And then if we can give here some more details and then you want to have an update on the China business. I am sure Mr. Klingler is happy to give you some details. And the second part of the question was if we can give you a guidance with regard to the dividend we do expect this year from our Chinese joint ventures. So I would say Mr. Klingler can start with the China business. Thank you

If we come to China, you know there is a situation the market demand over the last two, three years has increased heavily. There have been measures given by the government, which ended partially end of last year. But we still see a market in the passenger car, which isn't going up. On the other side we see that inflation is worrying more and more the Government, and that the Government is continue to survey it with a lot of sensibility. And therefore has some actions, has installed some actions, to reduce the impact of inflation like, for example, interest rate increases or in to a certain extent reduction of possibilities to get some money for the customers. On the other side, we have seen measures by Beijing, by the town of Beijing, which has reduced the possibility for customers in Beijing to buy a car, it’s more complicated, which has on one hand of course a negative impact on the sales numbers, which has on the other hand a very positive impact on the mix, because if you are buying a car, you buying an expensive one or more expensive one. So we are on a very good track concerning that and have increased our markets in Beijing additionally to that. If you want to counter not a positive impact from Beijing has been counterbalanced strongly by the stronger demand of the so-called second tier and third tier sorry towns. So what we see in general is first the market, which will not have the same growth rates than it had over the last two years, but what we have forecasted already, when we have started the year, at that time we believed the growth rate could be between 8% and 10%. So maybe it is still feasible, at least on the passenger cars. I’m not talking about the LCVs. We see as well that the second tier and third tier towns are continuing to grow strongly. And we believe that the market conditions in general will stay on a positive momentum. For us, there are no signs of getting worried about the market conditions in China. Additionally for us, we do have still a stock level which is competitors very low, which means we have a very good demand; we have a very good demand, we have very good control on prices and we just launched a new Passat with a good success as well for Shanghai, so in general still positive and optimistic on our performance in the Chinese market. Hans Dieter Pötsch: So, maybe I continue with the question on the dividend. We expect to receive 2011 for 2010 and that’s most probably going to be more than a billion and so far we have received less than half of them. Then another question was on, when related to Chattanooga, all the effects coming from there from the ramp up situation, might represent the worst hit for the P&L. Clearly Q2 was pretty in the P&L sense difficult quarter why because you know production is running already still on a some lower level, but its running. Personnel, staffing, of course, is already there for a much higher level, because there are a number of training processes taking place. So from that position coming I would say Q2 and Q3 the worst ones as we start shipping them at the end of Q3 that you look much better in the fourth quarter already. And there was another question on hedging. Now let me quickly make sure that we understand it correctly, because we say is there an effect in the P&L the answer would be simple there is no effect because you built the basis for the underlying business by entering into hedges. Once the basis business is triggering the hedge, you realize the business on the basis of this, but I understood your question is such that if we compared business being executed on the basis of a hedge position as compared to market conditions, if weren’t hedged of course we all understand that there is a broad range, but typically in the given framework, I would say clearly there should be a positive effect coming from activities of more than €0.5 per annum, could be also could also be substantially more than €0.5 billion, depending of course on the range of exchange rate fluctuations. Adam Hull – WestLB: If I could just follow on there, I mean that the spot rate is, whatever, €1.44 against the dollar, euro. Just to get a feel, in this year compared to spot, are we talking is it like €0.5 billion, or is it more, just to give us some feel? Because from the outside it's very difficult to compare some of the hedging policies of the different companies and what the positive effects are, feeding through into the P&L? Hans Dieter Pötsch: You already made the point. It is, and you are well aware of this, it is a piece of the business which is of course relevant for competition. And that's why I think take took quite a step in explaining this in the way I did, but I don’t want to say more in this. Adam Hull – WestLB: Okay, thanks, Hans.

Okay, thank you. Due to the limited period of time, I would like to ask you raise not more than two questions please, thank you.

Our next question today comes from Jochen Gehrke of Deutsche Bank. Your line is open, please go ahead. Jochen Gehrke – Deutsche Bank: Yes, good afternoon, just two quick ones. We have seen most recently some commentary suggesting that the fast growth of VW and the simultaneous buildup of new capacities is causing some quality issues. Now that's a familiar problem we have seen with competitors of yours and obviously one of the concerns we have. Could you just comment on the developments you've seen and, in particular, your new facilities? Are you happy with the quality levels that are coming out and, if so, what are you doing to assure that this is the case? And then secondly, just briefly on your cash flow, obviously second quarter was significant working capital outflow. Just for the remainder of the year, you talked a lot about stocks, but working capital in general, is this in the second half of the year going to be a major drag for the Company? Or should we go for give or take a flat number, or could it even be could it even be a positive? Thank you.

Okay, thank you. Jochen, you have two question for us. The first question will be answered by Mr. Klingler. It's you’re asking about the topic of quality, if we see any quality issues due to our worldwide growth. And the second question refers to the cash flow development in the second quarter and if we can give an outlook for the second half that would be it and the effects coming for working capital which development do we see for the rest of the year. Thank you.

: So in general, we see a positive quality development. Now if we come out to some of the reports we had here in the United States for example to talk about the JD Power, in the JD Power report we increased the quality as well not to that level what you wanted. But we know exactly why? So we will fix that step-by-step. But even there, there is a clean improvement and we’ve seen for example that we have a the brand Volkswagen six of our cars, which are the best safety picks, which is done here by an authority. And no other brand has this positive momentum. So I can assure that with the concern about the quality is fully shared and as you know, on our Mach 18 Strategy we have four goals and one of that is customer satisfaction, to become number one. And of course, the majority in there is to have the right cars at right time and of course in the right quality. So I think we have a clear commitment and to a certain extent, even an obsession to go further on, on the positive way of increasing our quality. Hans Dieter Pötsch: So then I can comment on the question with regard to cash flow and working capital. Now, clearly, we are not at all dissatisfied with development in terms of cash flow, because it’s necessary to look a little bit closer to some elements. And, of course, the dividend pay out, as I already mentioned, for Volkswagen and Scania in a magnitude of roughly €1.3 billion is of course a very important issue in this regard. A couple of other issues, in a nutshell I would say, on a clean basis, that cash flow development was pretty much okay. And then on the working capital side, I think it’s important to recognize also looking a little bit deeper, that the working capital development in the second quarter was driven, first of all of course by some higher funds which were tied up in inventories. And then secondly, by the situation that receivables was on a higher level, while liabilities stayed pretty much stable, so that's why, looking forward, we feel pretty comfortable with this situation. And then on the working capital, specifically, there, as Mr. Klingler and myself already mentioned, we have to some extent improved the situation as compared to the end of 2010 in terms of stocking, so for the next month to come, we of course would be interested to build some more inventory in the one and the other market. The bottom line is going to be difficult, because still we run production pretty much at the last point, we can. So, on the working capital side, I think its going to stay pretty much in the situation we are currently in; there might be some more additional lockup up of capital maybe some release nothing really substantial going forward. Jochen Gehrke – Deutsche Bank: Sorry, just a very quick follow-up. So the suggestion that the Passat launch in the U.S. could be delayed because of quality issues you discovered in the ramp up of that plant, that's just wrong? Hans Dieter Pötsch: That’s wrong. Jochen Gehrke – Deutsche Bank: Okay. Thank you.

Okay, let’s have the next question, please.

Our next question today comes from Thierry Huon of Exane BNP Paribas. Your line is open. Please go ahead. Thierry Huon – Exane BNP Paribas: Yes, good afternoon. It’s Thierry Huon speaking from Exane. Two quick questions. First, you mentioned during your presentation that the ramp up costs were sorry, the raw mat impact has been offset by the productivity gain. Could you share with us a split of the raw mat impact on the one hand and the productivity gain on the other one? And second question, about the Brazilian market. Mr. Klingler, you said that the market is getting really tough, because of the competition. Could you elaborate with on that? And could you tell us, if this is specific to Volkswagen, or if because you have a lack of new products, or if it's something true for all competitors in the market? Thank you.

Okay, Thierry, you have two questions for us. The first question refers to the development of the markets in Brazil and Mr. Klingler is happy to give you some more details if we see and what our plan with regard to new product. And the second question is refers to raw materials and the impact of our raw materials in the second quarter, if we can give here some more details how big was that negative impact.

: : : : : : : We do not forget that we have lost some production in the second quarter of 2011 due to some strikes in Curitiba, and this situation will not, of course the strikes have ended several weeks ago, be further projected over the next two quarters to come. So in a nutshell, market is getting much more interest of international manufactures, we as a market leader we will defend our position. : We do not forget that we have lost some production in the second quarter of 2011 due to some strikes in Curitiba, and this situation will not, of course the strikes have ended several weeks ago, be further projected over the next two quarters to come. So in a nutshell, market is getting much more interest of international manufactures, we as a market leader we will defend our position. Thierry Huon – Exane BNP Paribas: But is that mean that we should expect the margin of Volkswagen in Latin America to go down in the coming quarters or years?

I think we have shown over the last quarters that we keep on a positive momentum concerning our margins, but on the other side clearly there will be some.. Thierry Huon – Exane BNP Paribas: Normalization?

On the pricing and there will be some impact of course on the competition, while we believe that we have some good arguments to continue to fight on a good level. At the end of the day, we try to make the best balance out of course a very good market share, very good product and margins. Thierry Huon – Exane BNP Paribas: Thank you. Hans Dieter Pötsch: Then I can continue with the question on raw materials and productivity gains. And at this point I think I would probably refer to the swing sector analysis which we've seen, talking about operating results in comparison of the first half 2010 and the first half 2011. And you recognize that the €0.5 positive swing is therefore product cost. And this consists, if we take the major elements of clear negative in terms of raw materials, and that’s clearly a three digit number of also, sizable number on the terrorists side, because starting at the first of 1st of March. Some new tariff contracts work kicking in. But that's in a couple of other points that's overcompensated by the performance in terms of purchasing performance, productivity gains in the factories, and product changes And, as you are well aware, this is an issue which we have been focusing on for many years, in the . And that's organized in a very professional manner. We have concluded quite a few agreements for the future already, so that's why we would say, more or less, we should expect a similar situation for the second half of 2011 also.

Okay. Thierry Huon – Exane BNP Paribas: When you say similar situation it means no further deterioration, or it was a deterioration of the same magnitude as the one seen in the first half? Hans Dieter Pötsch: I think we can expect a similar performance in terms of product costs as we have seen in the first half, which means that it will also, going forward , be possible that price increases coming in through in spite of hedges, contracts and whatsoever, will be overcompensated by the performance in terms of purchasing, productivity and part changes. Thierry Huon – Exane BNP Paribas: Okay, thanks so much.

Okay, thank you. As we are running out of time, I would ask you to raise one question only, thank you.

Our next question today comes from Stefan Burgstaller of Goldman Sachs. Your line is open, please go ahead. Stefan Burgstaller – Goldman Sachs: Good afternoon. It’s Stefan here from Goldman Sachs. Apologies for digging into this working capital issue again. But could you just comment on the change in liabilities? It seems that whilst you were growing the business that you have paid your suppliers earlier. There's just an awkward move in the second quarter, where the liabilities actually go down, while clearly the business in volume terms grew. Your receivables, however, moved up, as you would expect them to. So was there anything specific or any supply chain issues? Did you have to pay suppliers earlier, which could explain this or – what am I not getting here?

Okay. Thank you, Stefan for the question again working capital, you want to know if there are any specific issues. Did we pay suppliers earlier or where there any problems in the supply chain? So maybe we can give you here some more details. Hans Dieter Pötsch: First of all on the Group level, let me just quickly say that there – the receivables with regard to Financial Services plays quite a roll because it representing the impact coming in from higher volume and I think that very well matching to the situation of the company as either in customer financing is still a very attractive issue. And then on the liability side, let me say this a little bit bold. We never pay late, but you are right that we took a decision in order to motivate, to do on one or the other side something, but early nothing of major importance but that's been the situation at the end of the second quarter. Stefan Burgstaller – Goldman Sachs: Would you expect this to reverse in the third quarter, in the second half? Hans Dieter Pötsch: I would say what can be expected is a situation that this normalizes, if you get this right. Stefan Burgstaller – Goldman Sachs: Okay. Thank you.

Okay. Thank you. And let’s have the next question please.

Our next question today comes from Michael Tyndall, Barclays Capital. Your line is open. Please go ahead. Michael Tyndall – Barclays Capital: Hello, it's Michael Tyndall from Barclays. Thanks for taking my question. One very quick one, just in relation to the Porsche merger. You've stated very clearly that the likelihood is 50% of it happening this year and, if I'm not wrong, both parties are contractually obliged to work towards it this year. I wonder if you could comment at all about next year, when the framework agreement expires. If we get a decision from the Stuttgart Prosecutor at some point and it's favorable, would you be willing to put a percentage likelihood on the merger for next year? That's my question, thanks.

Okay, thank you, Michael. So we have a question about the Porsche merger and if that would be possible also at a later stage, even if it will not happen this year, if we can give you there some new, we can comment here and give some details about the likelihood.

Let me first of all say, as I pointed out also in the little presentation and hopefully that was understandable, we are doing everything to support the intended merger for 2011. And all the parties, which who signed up the comprehensive agreement are obliged to do so. Now with the, there is a 50-50 situation which also is pointing towards another situation where there is a 50% chance for 2011 some merger might not be possible. Now you’re asking on whether then the merger would be postponed. It is to say that this kind of a scenario is not addressed in the comprehensive agreement. But of course its something that could be considered if the merger resolutions cannot be adopted in 2011. Michael Tyndall – Barclays Capital: Okay. Thanks.

Okay. We can take a couple, let’s say two, three questions more and then we switch to the journalists, thank you.

Our next question today comes from Jose Asumendi of RBS. Your line is open, please go ahead. Jose Asumendi – RBS: Question in relation to your sales planning. Could you talk about, around the seasonality of your car sales across regions? I'm just wondering whether we are going into a more seasonal pattern, or there are still some regions where we will see a stronger second half versus the first half. And overall do you expect to sell more cars in the second half than in the first half? Thank you.

Okay, thank you, Jose, for that question. This question is for Mr. Klingler you want to know our sales planning and if we, around the globe and around the countries, regions, if there is any seasonality and how are our expectations for the second half.

I will try to answer the question through the total market. As I said mentioned in my first statement, we believe that the general market passenger cars, will increase to a maximum of 6% in this year. So in the first half of the year it was about six something 6.1 and 6.2. And the second half of the year, as a consequence the growth rate could be a little bit lower. In any how it will be record market. So it’s the best market ever. Is there or are there impacts regionally? There are impacts regionally. It is pretty difficult to estimate that precisely. Just giving you two indications for example, in Spain we have seen the market has been in negative over the first six months, on a pretty strong level. We shall see how it will be development, but we don't see a two positive one over the next months to come. We still foresee it on another example, like for example India, and market where the growth rates the second half of the year will be lower than the first half of the year due to the Government's fight of decreasing the inflation and, as a consequence increase of interest rates, which now have a little bit more than 8%. And this year markets another example, which seems to continue to be very positive, like Russia. So in general we believe this market development will end up to this maximum six, could be the below and there is always our target is to outperform the market. Michael Tyndall – Barclays Capital: Thank you.

Okay, let’s have the next question please.

Our next question today comes from Stuart Pearson of Morgan Stanley. Your line is open. Please go ahead. Stuart Pearson – Morgan Stanley: Yeah, good afternoon, just one quick question left. It's regarding Audi as I don't think we have touched on that too much right now that the 12.9% is a great margin achieved in the second quarter. Are there any headwinds as you look at that business into the second half, other than the obvious currency and raw material ones, applicable to all divisions, particularly for the premium car segment right now, whether it's pricing competition, demand mix? Is there anything that really should make us think that margin should slip back significantly at all in the second half? Thank you.

Okay, thank you Stuart for that question, which refers to Audi and if we see any headwind in the second half, which will hurt the impressive margin Audi achieved in the second quarter.

: Stuart Pearson – Morgan Stanley: Okay, thank you.

Okay next question please?

Our next question today comes from Arndt Ellinghorst of Credit Suisse. Your line is open. Please go ahead. Arndt Ellinghorst – Credit Suisse: Yes, thanks very much and good afternoon. I want to come back to your P&L and to the other operating income line, because really it's been a big, big number with almost EUR1.1 billion in the Auto's division, so almost 40% of your Auto's EBIT. And also sequentially it increased massively over the first quarter. So I guess there are three issues with this. The first one is we need to understand what it is and you elaborated a little bit, Mr. Potsch, already. Secondly we need to understand how recurring this line is and then also, if we were to adjust for some of the non-recurring or non-operational effects in that number, the underlying profitability would have been quite significantly down in the second quarter versus the first one. So I guess that's also a discussion which should be fed in there. So could you probably talk a bit more about his number, how recurring it is and whether there has been an underlying deterioration in the business in the second quarter? Thank you.

: Hans Dieter Pötsch: So again if we look at this line item in the P&L, it is important to read that there are number of elements included, which do not necessarily have to do with the release of provisions. So there is a substantial part included in terms of currency effects and also when we enter into commodity futures transactions. Then of course, any release of that, and execution of that would also be reflected in this line item. So the other point is also clear, the buildup of provisions is always on a certain fact basis. If the fact goes away, this specific provision has to be released. The other point is I already mentioned is, I think that’s important to note at this point is that new provisions are booked within the functional areas like distribution or administration expenses, And the amount of the total provisions increase significantly due to the higher sales, volume in the last couple of months. So that's why, if one looks at whole picture, its clearly I would say normal development. And it’s important to put a few line items together to interpret in the right way. You were also asking whether this situation would be recurrent. Now I think and as difficult as this is to predict, similar to other items we should see, a normalization going forward there. Arndt Ellinghorst – Credit Suisse: Okay, thanks a lot.

And now the last question from an analyst, then we – we have time for one or two questions from the media, thank you. Thank you.

Our next question today comes from Fraser Hill of Bank of America. Your line is open. Please go ahead. Fraser Hill – Bank of America: Hi, good afternoon. Thanks very much. The question was just about Automotive cash flow and Financial Services. Could you confirm if there was a transfer from Auto to Financial Services' equity in the quarter, and how much that might have been? How much more are we going to see of that throughout the rest of 2011? And looking sort of further ahead, do you have any plans to put money into your pension deficit, as you think ahead over the next 12 months? Thanks.

Okay, thank you. So you are asking if we have increased the equity of Volkswagen Financial Service, if that is reflected also in the cash flow and then you asked a second question, what is it if we have any plans with regard to our pension, if we deficit, if we want to put some money in it. Hans Dieter Pötsch: To the first question, yes, we injected money from the order division to the Financial Service entity. I don't have to say that it's very important, of course, to comply with the legal requirements in the banking sector that's the basis for this. And of course if the business continues to grow that might happen to one the other time also in the future the amount is €400 million. And then the pension side, I think I said to one of you the time that we check this point the – on a regular basis. But so far no decision is made and I would not foresee any decision for the reminder of this year. Fraser Hill – Bank of America: Thank you.

Okay. And is there – we want now to switch to the media but I have not seen that there is a question coming from the media so if there is still a journalist dive in for now the last change to ask a question.

We take our next question from Chris Bryan, Financial Times. Your line is open. Please go ahead. Chris Bryant – Financial Times: Hello, gentlemen. I wondered if you could give me an update please on the Suzuki situation. I notice in the quarterly report it says that you are reviewing it. What does that mean exactly? What are you going to review?

Okay. Thank very much. You want to have an update on the relationship – on our relationship with Suzuki and there is a segment in our interim report and you want to have some more explanation. Hans Dieter Pötsch: Well, obviously the strategic cooperation (inaudible) with Suzuki is developing more slowly than expected and is not currently being implemented with the desired level of intensity. And that's why I think this is a pretty normal thing to do Volkswagen started reviewing this partnership after the end of the reporting period and of course that’s an important matter. And that's why the review is still ongoing.

Okay. Thank you very much. So we come to an end. Thank you for participating in today's conference call. Enjoy the rest of the day. Goodbye from Wolfsburg.

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