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Key events

Diesel issue

On September 18, 2015, the US Environmental Protection Agency (EPA) publicly announced in a “Notice of Violation” that irregularities in relation to nitrogen oxide (NOx) emissions had been discovered in emissions tests on certain Volkswagen Group vehicles with 2.0 l diesel engines in the USA. In this context, Volkswagen AG announced that noticeable discrepancies between the figures recorded in testing and those measured in actual road use had been identified in type EA 189 diesel engines and that this engine type had been installed in roughly eleven million vehicles worldwide. On November 2, 2015, the EPA issued a “Notice of Violation” alleging that irregularities had also been discovered in the software installed in US vehicles with type V6 3.0 l diesel engines.

The so-called diesel issue is rooted in a modification of parts of the software of the relevant engine control units – which, according to Volkswagen AG’s legal position, is only unlawful under US law – for the type EA 189 diesel engines that Volkswagen AG was developing at that time. This software function was developed and implemented from 2006 on without knowledge at the level of the Board of Management. Members of the Board of Management did not learn of the development and implementation of this software function until the summer of 2015.

There are furthermore no findings that, following the publication in May 2014 of the study by the International Council on Clean Transportation, an unlawful “defeat device” under US law was disclosed to the persons responsible for preparing the 2014 annual and consolidated financial statements as the cause of the high NOx emissions in certain US vehicles with 2.0 l type EA 189 diesel engines. Rather, at the time the 2014 annual and consolidated financial statements were being prepared, the persons responsible for preparing these financial statements remained under the impression that the issue could be resolved with comparatively little expense.

In the course of the summer of 2015, however, it became progressively apparent to individual members of Volkswagen AG’s Board of Management that the cause of the discrepancies in the USA was a modification of parts of the software of the engine control unit that was later identified as an unlawful “defeat device” as defined by US law. This culminated in Volkswagen’s disclosure of a “defeat device” to the EPA and the California Air Resources Board, a department of the Environmental Protection Agency of the State of California, on September 3, 2015. According to the assessment at the time by the responsible persons dealing with the matter, the magnitude of the costs expected to result for the Volkswagen Group (recall costs, retrofitting costs, and financial penalties) was not fundamentally dissimilar to that in previous cases involving other vehicle manufacturers. It therefore appeared to be manageable overall considering the business activities of the Volkswagen Group. This assessment by Volkswagen AG was based, among other things, on the advice of a law firm engaged in the USA for regulatory approval issues, according to which similar cases had in the past been amicably resolved with the US authorities. The EPA’s publication of the “Notice of Violation” on September 18, 2015, which the Board of Management had not expected, especially at that time, then presented the situation in an entirely different light.

In fiscal year 2021, special items in connection with the diesel issue amounted to €750.8 million; they were mainly recognized in the other operating result. These special items were attributable to additional expenses of €967.6 million primarily for legal risks. This was offset by income from damage settlements and income from the reversal of provisions for warranties that are no longer required. The income from damage settlements of €216.8 million was brought about by agreements with former members of the Board of Management entered into in June 2021 with the goal of achieving speedy, legally certain, and final resolution of the diesel issue as far as the civil liability of members of governing bodies was concerned. To this end, Volkswagen and Audi entered into damage settlements (liability settlements) with Prof. Dr. Winterkorn and Mr. Stadler respectively in connection with the diesel issue. Prof. Dr. Winterkorn’s damage payment amounts to €11.2 million and that of Mr. Stadler to €4.1 million. In addition, provisions of €3.1 million were reversed in this context. Volkswagen has furthermore reached agreement with the relevant insurers under its directors and officers liability policies (D&O insurance) on payment of an aggregate sum of €270 million (coverage settlement), of which €195.9 million was recognized in profit or loss.

In addition, agreement was reached on damage payments by a former member of Audi’s Board of Management and by a former member of Porsche’s Board of Management. One former member of Audi’s Board of Management was unwilling to reach a settlement; legal action is being prepared against him. Claims were already asserted against a former member of the Volkswagen Passenger Cars brand Board of Management. The Annual General Meeting of Volkswagen AG gave its approval to these agreements on July 22, 2021.

Further information on the litigation in connection with the diesel issue can be found in the “Litigation” section.

Antitrust investigations

In April 2019, the European Commission issued an initial statement of objections to Volkswagen AG, AUDI AG, and Dr. Ing. h.c. F. Porsche AG in connection with the Commission’s antitrust investigation of the automobile industry. These objections stated the European Commission’s preliminary evaluation of the matter and afforded the opportunity to comment. Following entry into a formal settlement procedure, in April 2021 the Commission issued a revised statement of objections raising charges that were considerably more narrow. On this basis, a settlement decision was issued on July 8, 2021 concluding the administrative action and assessing a total fine of roughly €502 million against the three brands. This amount has been recognized under other operating expenses. The subject matter scope of the decision is limited to the cooperation of German automobile manufacturers on individual technical questions in connection with the development and introduction of SCR (selective catalytic reduction) systems for passenger cars that were sold in the European Economic Area. The manufacturers are not charged with any other misconduct such as price fixing or allocating markets and customers.

Volkswagen accepted the decision, which was served on July 12, 2021, and filed no appeal, thus allowing the decision to become final.

In 2011, the European Commission conducted searches at European truck manufacturers for suspected unlawful exchange of information during the period from 1997 to 2011; in November 2014, the Commission issued a statement of objections to MAN, Scania, and the other truck manufacturers concerned. In its settlement decision of July 2016, the European Commission assessed fines against five European truck manufacturers. MAN’s fine was waived in full as the company had informed the European Commission about the irregularities as a key witness.

In September 2017, the European Commission fined Scania €0.88 billion. Scania appealed to the European Court of Justice in Luxembourg and mounted a comprehensive defense. In a judgment rendered in February 2022, the European General Court (Court of First Instance) rejected Scania’s appeal in its entirety. Scania is currently analyzing the judgment and will in timely fashion decide whether to appeal it to the European Court of Justice. Scania had already recognized a provision of €0.4 billion in 2016 and increased this provision to approximately €0.9 billion in the reporting year.

Effects of the Covid-19 pandemic / shortage of semiconductors

Many restrictive measures were eased in the course of 2021 for reasons that include the rising vaccination rate. In the consolidated financial statements as of December 31, 2021, no material impairment losses attributable to the Covid-19 pandemic had to be recognized.

The semiconductor shortage and the resulting supply bottlenecks had an increasingly negative impact across the entire industry. This also affected production in the Volkswagen Group. As a result, the Volkswagen Group recorded a reduction in inventories of finished goods and a simultaneous increase in raw materials and work in progress in the fiscal year (see also the information provided in the section entitled “Inventories”).

Please also refer to the comments in the 2021 group management report, specifically in the chapters entitled Business Development, Results of Operations, Financial Position and Net Assets, Report on Expected Developments and Report on Risks and Opportunities.

Material Transactions

The merger of MAN SE with TRATON SE was adopted by resolution of the Annual General Meeting of MAN SE on June 29, 2021. The merger resolution also triggered the process to transfer the shares held by the noncontrolling interest shareholders of MAN SE to TRATON SE against payment of an appropriate cash settlement (merger squeeze-out). In this context, the present value of the put options granted, amounting to approximately €587 million, was recognized as a current liability directly in equity. The noncontrolling interests in the Volkswagen Group’s equity, as well as the retained earnings and other reserves attributable to the shareholders of Volkswagen AG declined accordingly.

The merger of MAN SE with TRATON SE was entered in the commercial register for MAN SE and TRATON SE on August 31, 2021. The squeeze-out took legal effect on the date of this entry in the commercial register. This was followed on September 3, 2021 by the disbursement of the cash settlement of €70.68 per ordinary and preferred share to the noncontrolling interest shareholders of MAN SE, thus completing the MAN SE squeeze-out. Judicial award proceedings initiated by noncontrolling interest shareholders who had received a settlement as a result of the squeeze-out are underway to review whether the cash settlement is appropriate.

In mid-June 2021, Volkswagen and the Swedish battery cell producer Northvolt AB agreed to concentrate production of Volkswagen premium cells in Skellefteå, Sweden. In connection with this, Volkswagen participated in a financing round at Northvolt AB that was proportionate to its shareholding, investing a further USD 650 million in the company. Volkswagen also increased its existing convertible loan by a further €190 million and, at the same time, converted this part of the loan to preferred shares. This increased Volkswagen’s ownership interest in Northvolt AB to 23.6%. Due to favorable terms and conditions on conversion, the measurement of the converted loan resulted in non-cash income of €62 million. As a result, the carrying amount of the equity investment in Northvolt AB rose by €796 million. A convertible loan of €240 million remains on issue.

The sale of MAN Truck & Bus Österreich GesmbH, Steyr/Austria (MTBÖ) as part of restructuring measures was completed with effect from August 31, 2021. The assets and liabilities of MTBÖ were presented as a disposal group in the financial statements of the Volkswagen Group until the date of sale. The sale led to the recognition of an expense, of which €160 million was mainly attributable to impairment losses on property, plant and equipment and €144 million to a loss on deconsolidation. The total expense of €304 million is presented in other operating expenses. The sale of the shares in MTBÖ resulted in a net cash outflow of €199 million, which is presented in cash flows from investing activities.

At the end of July 2021, the Volkswagen Supervisory Board approved an agreement with investment firm Attestor Limited and with Pon Holdings B.V. for the submission of a joint public takeover offer for the shares of Europcar Mobility Group S.A., Paris/France through a consortium company.

Following a successful review of the offer documents, the French regulator approved the takeover offer at the end of November 2021. The period during which Europcar shareholders can tender their shares started at the end of November 2021 and will end when antitrust approval is granted. Together with its two partners, Volkswagen is offering a price of €0.50 per Europcar share through the consortium company. If more than 90% of the shares are tendered, an additional one cent per share will be paid. As matters stand, the consortium will assume joint control of Europcar if the offer is accepted.

Volkswagen is the writer of put options held by the other members of the consortium, and the other members have granted Volkswagen call options on their shares in the consortium company. The measurement of the options led to a non-cash expense of €103 million in fiscal year 2021, which was recognized in the financial result.

In 2021, the Volkswagen Group and Rimac Automobili d.o.o., Sveta Nedelja/Croatia (Rimac), established Bugatti Rimac d.o.o., which has its headquarter in Sveta Nedelja. Volkswagen has contributed its consolidated subsidiaries Bugatti Automobiles S.A.S, Molsheim/France and an initial 51% of Bugatti International S.A., Strassen/Luxembourg. After proportional profit elimination, the contribution resulted in a non-cash gain of €124 million, which was recognized in the other operating result. Rimac holds 55% of the shares in the company and Volkswagen holds 45% through Dr. Ing. h.c. F. Porsche AG (Porsche). In addition, Porsche holds a direct interest of 22% in Rimac. In the consolidated financial statements, both equity investments are reported under equity-accounted investments.

Initially, Bugatti Rimac d.o.o. will produce two hypercar models, the Bugatti Chiron and the Rimac Nevera. It is envisaged that further in the future the activities of Bugatti Rimac d.o.o. will focus on a joint product portfolio under the Bugatti brand name with the aim of developing, producing and selling electric-powered, luxury hyper sports cars.

To expand its battery expertise, Volkswagen acquired an interest in Gotion High-Tech Co., Ltd., Hefei/China (Gotion) through Volkswagen (China) Investment Co. Ltd., and is now the largest shareholder of the Chinese battery supplier with an interest of 26%. The Group spent a total of €1.2 billion on this transaction. The investment is accounted for using the equity method.

Acquisition of Navistar

On July 1, 2021, a TRATON GROUP company acquired all of the outstanding shares in Navistar International Corporation (Navistar), a US manufacturer of commercial vehicles based in Lisle, Illinois/USA. The purchase price of €3,118 million (USD 3,700 million) was paid in cash. TRATON SE now indirectly holds 100% of the shares in Navistar International Corporation, which was previously accounted for using the equity method (interest of 16.7%). Trading in Navistar shares on the New York Stock exchange has been discontinued.

Due to the size of the transaction, initial recognition of the acquisition has not yet been finalized as the internal reviews of the information underlying the purchase price allocation have not yet been completed. This means that the amounts recognized as of December 31, 2021 are provisional.

The acquisition resulted in goodwill in the amount of €2,783 million to reflect the synergies arising from the operation with Navistar. These relate particularly to the growth in the share of the market, to procurement, production costs, modularization and the use of shared components, and to the area of research and development.

The fair value of the equity interest in Navistar that TRATON GROUP had held immediately prior to the acquisition date was determined on the basis of the share price of USD 44.50/share at the acquisition date; it amounts to €624 million. The remeasurement of this equity interest resulted in a gain of €219 million. Moreover, the derecognition of the equity accounted investment during the initial consolidation of Navistar resulted in income and expenses previously recognized directly in equity being reclassified to the income statement, which led to an expense of €37 million. This in turn resulted in a gain of €182 million, which is presented in the share of the result of equity-accounted investments.

The preliminary allocation of the purchase price to the assets acquired and liabilities assumed is as follows:

€ million


Preliminary fair values as of July 1, 2021




Consideration transferred






Unwinding of pre-existing relationships



Exchange of share-based payment awards






€ million


Preliminary fair values as of July 1, 2021




Net assets acquired



Intangible assets



of which Customer relationships



of which Brand names



Property, plant and equipment



Lease assets



Other equity investments



Noncurrent receivables and financial assets






Current receivables and financial assets



Cash funds



Deferred tax assets



Total assets






Noncurrent financial liabilities



Provisions for pensions and similar obligations



Deferred tax liabilities



Other noncurrent liabilities and provisions



Current financial liabilities



Other current liabilities and provisions



Total liabilities



Balance of net assets acquired



€ million


Preliminary goodwill calculation




Consideration transferred



Equity interests



Fair value of equity interests held previously






Net assets acquired






The consideration transferred includes an amount of €126 million for winding down pre-existing relationships. This corresponds to the fair value of the Volkswagen Group’s receivables from and liabilities to Navistar recognized as of the acquisition date. The fair value of an amount receivable by MAN Truck & Bus from Navistar arising from the termination of a development project exceeds the previously recognized carrying amount by €12 million. The difference was recognized through profit or loss in other operating income.

Receivables and financial assets include the following groups of receivables for which the gross amounts differ from the fair values:

€ million


Gross amount


Amount expected to be uncollectible






Financing business receivables





Lease receivables





Trade receivables





Other receivables





The transaction costs of €34 million incurred up to December 31, 2021 for implementing the business combination were recognized in administrative expenses.

As a result of the consolidation of Navistar as of July 1, 2021, the Volkswagen Group’s sales revenue increased by €3,494 million as of December 31, 2021, while earnings after tax, including amortization on realized hidden reserves, decreased by €217 million.

If Navistar had been included in the consolidated financial statements of the Volkswagen Group as a fully consolidated subsidiary since January 1, 2021, consolidated sales revenue after consolidation reported as of December 31, 2021 would have amounted to €253,802 million, and profit after tax would have been €526 million lower, at €14,942 million.