Summary of business development and economic position

The Board of Management of Volkswagen AG considers business development and the economic position to be satisfactory overall in the context of the current challenges.

The Volkswagen Group’s business was impacted by the effects of the Covid-19 pandemic and in particular by the limited vehicle availability as a result of the semiconductor shortage throughout the entire reporting period, and this led to deviations from the original forecast. Moreover, our industry is affected by fierce competition, technological change and growing environmental awareness. In this environment, we delivered 8.9 million vehicles to customers. The Group’s sales revenue was up 12.3%, mainly due to mix effects and as a result of the improved financial services business. The operating result before special items went up to €20.0 billion. The operating return on sales before and after special items was 8.0% and 7.7% respectively, putting it above the forecast range.

Research and development costs reflect our activities undertaken to safeguard the Company’s future viability; the R&D ratio in the Automotive Division was higher than expected, at 7.6%, because of a rise in research and development costs and lower sales revenue.

The reduction in capital expenditure meant that the Automotive Division reached the forecast ratio of capex to sales revenue of 5.1%. Net cash flow amounted to €8.6 billion; mainly for earnings-related reasons, this was, as expected, noticeably up on the previous year despite higher cash outflows for M&A activities. Including the acquisition of Navistar, net liquidity stood at €26.7 billion at the end of fiscal year 2021 and was therefore better than recently estimated.

Return on investment (ROI) in the Automotive Division improved to 10.4% and was therefore, as anticipated, above our minimum required rate of return on invested capital.