Basis of consolidation

In addition to Volkswagen AG, the consolidated financial statements comprise all significant German and non-German subsidiaries, including structured entities that are controlled directly or indirectly by Volkswagen AG. The structured entities are used primarily to enter into asset-backed securities transactions to refinance the financial services business and to invest surplus liquidity in special securities funds.

Subsidiaries whose business is dormant or insignificant, both individually and in the aggregate, for the fair presentation of the net assets, financial position and results of operations as well as the cash flows of the Volkswagen Group are not consolidated. They are carried in the consolidated financial statements at cost net of any impairment losses and reversals of impairment losses required to be recognized.

Significant companies where Volkswagen AG is able, directly or indirectly, to significantly influence financial and operating policy decisions (associates), or that are directly or indirectly jointly controlled (joint ventures), are accounted for using the equity method. Joint ventures also include companies in which the Volkswagen Group holds the majority of voting rights, but whose articles of association or partnership agreements stipulate that important decisions may only be resolved unanimously. Insignificant associates and joint ventures are carried at cost net of any impairment losses and reversals of impairment losses required to be recognized.

The composition of the Volkswagen Group is shown in the following table:

The list of all shareholdings that forms part of the annual financial statements of Volkswagen AG can be downloaded from the electronic companies register at www.unternehmensregister.de and from www.volkswagen-group.com/investor-relations.

The following consolidated German subsidiaries with the legal form of a corporation or partnership have met the criteria set out in section 264(3) or section 264b of the Handelsgesetzbuch (HGB – German Commercial Code) and have as far as possible exercised the option not to publish annual financial statements:

• AUDI AG, Ingolstadt
• Audi Berlin GmbH, Berlin
• Audi Frankfurt GmbH, Frankfurt am Main
• Audi Hamburg GmbH, Hamburg
• Audi Hannover GmbH, Hanover
• Audi Leipzig GmbH, Leipzig
• Audi München GmbH, Munich
• Audi Sport GmbH, Neckarsulm
• Audi Stuttgart GmbH, Stuttgart
• Auto & Service PIA GmbH, Munich
• Autostadt GmbH, Wolfsburg
• Bugatti Engineering GmbH, Wolfsburg
• CARIAD SE, Wolfsburg
• dx.one GmbH, Wolfsburg
• Eberhardt Kraftfahrzeug GmbH + Co. KG, Ulm
• GETAS Verwaltung GmbH & Co. Objekt Augsburg KG, Pullach i. Isartal
• GETAS Verwaltung GmbH & Co. Objekt Heinrich-von-Buz-Straße KG, Pullach i. Isartal
• HABAMO Verwaltung GmbH & Co. Objekt Sterkrade KG, Pullach i. Isartal
• Haberl Beteiligungs-GmbH, Munich
• Held & Ströhle GmbH & Co. KG, Ulm
• H-Tec SYSTEMS GmbH, Augsburg
• MAHAG Automobilhandel und Service GmbH & Co. oHG, Munich
• MAHAG GmbH, Munich
• MAHAG Sportwagen Zentrum Albrechtstraße GmbH, Munich
• MAN Energy Solutions SE, Augsburg
• MOIA GmbH, Berlin
• MOIA Operations Germany GmbH, Hanover
• Porsche Holding Stuttgart GmbH, Stuttgart
• Porsche Niederlassung Mannheim GmbH, Mannheim
• Porsche Siebte Vermögensverwaltung GmbH, Wolfsburg
• PowerCo SE, Salzgitter
• PZ Leipzig GmbH, Leipzig
• Schwaba GmbH, Augsburg
• SEAT Deutschland Niederlassung GmbH, Weiterstadt
• SKODA AUTO Deutschland GmbH, Weiterstadt
• SZM Sportwagen Zentrum München GmbH, Munich
• VfL Wolfsburg-Fußball GmbH, Wolfsburg
• VGRB GmbH, Berlin
• VGRD GmbH, Wolfsburg
• VGRDD GmbH, Dresden
• VGRHH GmbH, Hamburg
• Volkswagen ADMT Hannover GmbH, Hanover
• Volkswagen AirService GmbH, Braunschweig
• Volkswagen Automobile Berlin GmbH, Berlin
• Volkswagen Automobile Chemnitz GmbH, Chemnitz
• Volkswagen Automobile Frankfurt GmbH, Frankfurt am Main
• Volkswagen Automobile Hamburg GmbH, Hamburg
• Volkswagen Automobile Hannover GmbH, Hanover
• VOLKSWAGEN Automobile Leipzig GmbH, Leipzig
• Volkswagen Automobile Rhein-Neckar GmbH, Mannheim
• Volkswagen Automobile Stuttgart GmbH, Stuttgart
• Volkswagen Beteiligungsverwaltung GmbH, Wolfsburg
• Volkswagen Deutschland GmbH & Co. KG, Wolfsburg
• Volkswagen Deutschland Verwaltungs GmbH, Wolfsburg
• Volkswagen Gebrauchtfahrzeughandels und Service GmbH, Langenhagen
• Volkswagen Group IT Solutions GmbH, Wolfsburg
• Volkswagen Group Real Estate GmbH & Co. KG, Wolfsburg
• Volkswagen Group Services GmbH, Wolfsburg
• Volkswagen Immobilien GmbH, Wolfsburg
• Volkswagen Konzernlogistik GmbH & Co. OHG, Wolfsburg
• Volkswagen Leasingobjekt GmbH, Braunschweig
• Volkswagen Original Teile Logistik GmbH & Co. KG, Baunatal
• Volkswagen Osnabrück GmbH, Osnabrück
• Volkswagen Sachsen GmbH, Zwickau
• Volkswagen Sechste Leasingobjekt GmbH, Braunschweig
• Volkswagen Software Asset Management GmbH, Wolfsburg
• Volkswagen Vermögensverwaltungs-GmbH, Wolfsburg
• Volkswagen Zubehör GmbH, Dreieich

CONSOLIDATED SUBSIDIARIES

The fiscal year’s changes in the consolidated Group are shown in the following table:

The initial consolidation or deconsolidation of these subsidiaries, either individually or collectively, did not have a significant effect on the presentation of the net assets, financial position and results of operations. The unconsolidated structured entities are immaterial from a Group perspective. In particular, they do not give rise to any significant risks to the Group.

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates QuantumScape, Gotion High-Tech Co., Ltd., Hefei/China (Gotion), Northvolt AB, Stockholm/Sweden (Northvolt AB), and Sinotruk (Hong Kong) Ltd., Hongkong/China (Sinotruk), were material as of the balance sheet date.

QuantumScape

QuantumScape is a US-based start-up for lithium-metal solid state batteries. A strategic partnership has been set up between Group companies and QuantumScape for the future joint production of battery cells. QuantumScape’s principal place of business is in San José/USA.

As of December 31, 2023, the quoted market price of the shares in QuantumScape amounted to €541 million (previous year: €453 million).

Gotion

Gotion is a Chinese technology company that engages primarily in research and development, production and sales of lithium-ion batteries and in electric transmission and transformation businesses. Group companies and Gotion have agreed upon a strategic framework for cooperation in the development, manufacture and distribution of battery cells. Gotion’s principal place of business is in Hefei/China.

As of December 31, 2023, the quoted market price of the shares in Gotion amounted to €1.2 billion (previous year: €1.8 billion).

Northvolt AB

Northvolt AB develops and produces lithium-ion batteries. Battery purchase agreements are in place between Group companies and Northvolt AB. Northvolt AB’s principal place of business is in Stockholm/Sweden.

Sinotruk

Sinotruk is one of the largest truck manufacturers in the Chinese market. Sinotruk’s principal place of business is in Hongkong/China.

As of December 31, 2023, the quoted market price of the shares in Sinotruk amounted to €1,222 million (previous year: €903 million).

There were no unrecognized losses relating to investments in associates in the fiscal year (previous year: €2 million). Financial guarantees have been issued to associates in an amount of €1 million (previous year: €1 million).

INTERESTS IN JOINT VENTURES

From a Group perspective, the joint ventures FAW-Volkswagen Automotive Company Ltd., Changchun/China, SAIC-Volkswagen Automotive Company Ltd., Shanghai/China, and SAIC-Volkswagen Sales Company Ltd., Shanghai/China, were material at the reporting date.

FAW-Volkswagen Automotive Company

FAW-Volkswagen Automotive Company develops, produces and sells passenger cars. There is an agreement in place between Group companies and the joint venture partner China FAW Corporation Limited regarding a long-term strategic partnership. The principal place of business is in Changchun/China.

SAIC-Volkswagen Automotive Company

SAIC-Volkswagen Automotive Company develops and produces passenger cars. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai/China.

SAIC-Volkswagen Sales Company

SAIC-Volkswagen Sales Company sells passenger cars for SAIC-Volkswagen Automotive Company. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai/China.

The carrying amount of equity-accounted investments includes the equity investment in GMH.

There were no unrecognized losses relating to investments in joint ventures in the fiscal year and the previous year. Contingent liabilities to joint ventures amounted to €219 million (previous year: €236 million), while financial guarantees stood at €70 million (previous year: €70 million). Cash funds of joint ventures amounting to €150 million (previous year: €172 million) are deposited as collateral for asset-backed securities transactions and are therefore not freely available.

IFRS 5 – NONCURRENT ASSETS HELD FOR SALE

Assets and disposal groups held for sale of the current fiscal year

The intention resolved at Dr. Ing. h.c. F. Porsche AG, Stuttgart (Porsche AG) in September 2022 to sell two Russian sales companies in the Passenger Cars and Light Commercial Vehicles segment, OOO Porsche Russland, Moscow/Russia, and OOO Porsche Center Moscow, Moscow/Russia, as well as one company assigned to the Financial Services segment, OOO Porsche Financial Services Russland, Moscow/Russia, continues to be in place. In view of the change in external conditions, the disposal project is expected to be completed within fiscal year 2024. An impairment loss of €25 million was recognized for the disposal group as of December 31, 2022. Another minor impairment loss and offsetting currency translation effects were identified as of December 31, 2023; they are recognized in the other operating result.

It was resolved in the fourth quarter of 2022 to sell the following fully consolidated subsidiaries allocated to the Financial Services segment: OOO Volkswagen Bank RUS, Moscow/Russia, OOO Volkswagen Group Finanz, Moscow/Russia, and OOO Volkswagen Financial Services RUS, Moscow/Russia. Once the resolution had been passed by the competent bodies, the implementation of a disposal plan was started and expected to be completed in 2023. However, it could not be finalized as an approval by the Russian authorities was still outstanding as of December 31, 2023. It is expected that the outstanding approval will ultimately be granted and the disposal plan therefore completed in the first half of 2024. Impairment losses of €186 million were recognized in this context in the period up to December 31, 2023. The companies, OOO Volkswagen Group Finanz, Moscow/Russia, and OOO Volkswagen Financial Services RUS, Moscow/Russia, were sold after the end of the fiscal year, on January 18, 2024.

On December 15, 2022, the Supervisory Board of Volkswagen AG resolved to sell the MAN ES gas turbine business of MAN Energy Solutions SE, Augsburg, and MAN Energy Solutions Schweiz AG, Zurich/Switzerland, by way of an asset deal to CSIC Longjiang GH Gas Turbine Co. Ltd., Harbin/China, and its subsidiaries under German and Swiss law. Following approval by the competent authorities, the transaction is expected to be completed within fiscal year 2024.

In accordance with IFRS 5, the assets and liabilities held for sale were recognized at the lower of their carrying amount and fair value less expected costs of disposal.

The main groups of assets and liabilities classified as held for sale in the Volkswagen Group as of December 31, 2023, are shown below.

The cumulative income and expenses in connection with the disposal groups held for sale are recognized in other comprehensive income; they amount to €– 289 million.

Transactions completed in the current fiscal year

On March 3, 2023, the Supervisory Board of the Volkswagen Group resolved to sell OOO Volkswagen Group Rus, Kaluga/Russia, and its subsidiaries, OOO Scania Finance, Moscow/Russia, OOO Scania Insurance, Moscow/Russia, and OOO Scania Leasing, Moscow/Russia. These companies were consequently classified as a disposal group held for sale as of March 31, 2023. The sale was completed in May 2023. Additional disclosures can be found in the “Key events” section.

EURO-Leasing GmbH, Sittensen, a fully consolidated subsidiary of Volkswagen Financial Services AG, transferred its passenger cars business to a shelf company acquired in the fiscal year. Subsequently, 51% of the shares in the company, which was renamed Euromobil GmbH, Sittensen, was sold to Europcar Mobility Group, Paris/France. The removal of Euromobil GmbH from full consolidation, the sale of the shares and the remeasurement of the remaining 49% interest resulted in a gain of €13 million, which is reported in other operating income. The transaction was finally completed in the fourth quarter of 2023.