Financial Position

Financial position of the Group

In the period from January to December 2023, the Volkswagen Group recorded gross cash flow of €48.5 (49.3) billion. The non-cash measurement effects in connection with hedging transactions, which are included in earnings, must be eliminated from the cash flow statement. Cash outflows of around €1.5 billion for tax payments relating to prior assessment periods had an adverse impact. The change in working capital amounted to €−29.1 (−20.8) billion, driven primarily by a higher increase in receivables and lease assets and a smaller rise in liabilities compared to the prior year. A smaller increase in inventories and higher other provisions had an offsetting effect. Cash outflows resulting from the diesel issue were lower than in 2022. Cash flows from operating activities went down by €9.1 billion to €19.4 billion in fiscal year 2023.

The Volkswagen Group’s investing activities attributable to operating activities grew by €2.6 billion to €28.0 billion in the reporting year, mainly as a result of higher investments in capex and additions to capitalized development costs. In the previous year, this item had included the full portion of the purchase price payable by Volkswagen for the acquisition of Europcar, which was contributed to Green Mobility Holding and amounted to €1.7 billion.

The Volkswagen Group’s financing activities produced a cash inflow of €16.0 (4.2) billion. Financing activities primarily include the issuance and redemption of bonds as well as changes in other financial liabilities. This also included the issuance of green hybrid notes with a total nominal value of €1.75 billion, which were successfully placed in August 2023. The redemption of the hybrid note of €0.75 billion called as of September 2023 reduced cash flows from financing activities accordingly. Financing activities also included cash inflows and outflows in connection with the IPO of Porsche AG completed in 2022 (primarily the payment of a special dividend to the shareholders of Volkswagen AG) and the dividend to the shareholders of Volkswagen AG; together, these amounted to around €11 billion. At the end of December 2023, the Volkswagen Group reported cash and cash equivalents of €43.5 (29.7) billion in its cash flow statement.

At the end of fiscal year 2023, the Volkswagen Group’s net liquidity stood at €−147.4 billion, compared with €−125.8 billion on December 31, 2022.

AUTOMOTIVE DIVISION NET CASH FLOW 2023

€ billion

Financial position of the Automotive Division

In the reporting year, the Automotive Division’s gross cash flow was €35.8 billion, an earnings-related rise of €2.6 billion compared with the previous year. The non-cash measurement effects in connection with hedging transactions, which are included in earnings, must be eliminated from the cash flow statement. Cash outflows of around €1.5 billion for tax payments relating to prior assessment periods had an adverse impact. The change in working capital amounted to €2.1 (−3.3) billion. The year-on-year change was primarily attributable to a smaller rise in inventories and higher other provisions. These effects were set against a smaller increase in liabilities than in the previous year. As a consequence, cash flows from operating activities in an amount of €37.9 billion were 26.7% higher than in the previous year.

In the period from January to December 2023, investing activities attributable to operating activities amounting to €27.2 (25.1) billion were up on the prior-year figure. Within this figure, investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) increased by €1.6 billion to €14.4 billion. The ratio of capex to sales revenue was 5.4 (5.5)%.

A considerable portion of capex was above all allocated to our production facilities and to models that we launched in 2023 or are planning to launch in 2024. They relate to both new vehicles to expand our model range and product upgrades for established models. Other investment priorities include the electrification and digitalization of our products, technologies of the future and enhancements to the modular and all-electric toolkits and platforms. Additions to capitalized development costs rose by €1.4 billion to €11.1 billion in the reporting year. The “Acquisition and disposal of equity investments” item amounted to €−2.1 (−3.0) billion; it included primarily strategic investments in a variety of companies, in particular XPeng. In the previous year, this had included the full portion of the purchase price payable by Volkswagen for the acquisition of Europcar, which was contributed to Green Mobility Holding and amounted to €1.7 billion.

The Automotive Division’s investing activities also include the convertible loan granted to Horizon Robotics.

In the period from January to December 2023, the Automotive Division’s net cash flow of €10.7 billion was €5.9 billion up on the prior-year figure. The cash conversion rate, which is the ratio of the Automotive Division’s net cash flow to operating result, stood at 57.0 (29.2)% at the end of 2023.

In fiscal year 2023, the Automotive Division’s financing activities led to a cash outflow of €12.9 billion, compared with a cash inflow of €8.6 billion in the previous year. These mainly reflect the cash inflows and outflows in connection with the IPO of Porsche AG completed in the previous year (primarily the payment of a special dividend to the shareholders of Volkswagen AG) as well as the dividend distributed to the shareholders of Volkswagen AG from the appropriation of net profit for fiscal year 2022 and the redemption of the hybrid note called as of September 2023. A cash inflow was generated in fiscal year 2023 by the green hybrid notes with a total nominal value of €1.75 billion that were successfully placed via Volkswagen International Finance N.V. in August 2023. These notes comprise a €1.0 billion note with a coupon of 7.5%, which is noncallable for five years,

and a €0.75 billion note with a coupon of 7.875%, which is noncallable for nine years. Both notes are perpetual and increase net liquidity and equity by the nominal amount less transaction and other costs. Financing activities also include the issuance and redemption of bonds and changes in other financial liabilities.

Despite the cash outflows due to the special dividend in connection with Porsche AG’s IPO, the Automotive Division’s net liquidity was robust, at €40.3 billion, on December 31, 2023, compared with €43.0 billion at the end of 2022. The Automotive Division’s net liquidity as a proportion of consolidated sales revenue decreased to 12.5 (15.4)% in the reporting year, mainly because sales revenue rose faster than net liquidity.

Financial position in the Financial Services Division

In fiscal year 2023, the Financial Services Division recorded a gross cash flow of €12.7 billion, down €3.4 billion on the prior-year figure for reasons such as lower earnings. The change in working capital amounted to €−31.2 (−17.5) billion. Higher growth in lease assets and receivables and a rise in inventories led to a higher level of funds tied up in working capital than in the previous year. This was offset by a larger increase in liabilities. Consequently, cash flows from operating activities decreased by €17.1 billion to €−18.5 billion.

Investing activities attributable to operating activities amounted to €0.9 (0.4) billion.

The Financial Services Division’s financing activities generated a cash inflow of €28.9 billion in the reporting year. This figure relates primarily to the issuance and redemption of bonds and to other financial liabilities. In the prior-year period, there had been a cash outflow of €4.4 billion.

On December 31, 2023, the Financial Services Division’s negative net liquidity, which is common in the industry, was €−187.7 billion as against €−168.8 billion at the end of 2022.