March 8, 2006

VW CEO says more cost-cutting is needed

Wolfsburg, Germany – The Volkswagen Group significantly increased its earnings last year thanks to its ForMotion cost-cutting plan and comprehensive new model initiative, but its CEO still warns that considerable efforts are needed to protect Volkswagen’s future.

The company’s profit before tax rose by 58.2 per cent to 1.7 billion Euros in 2005 and was able to meet forecasts, said Dr. Bernd Pischetsrieder, Chairman of the Board of Management of the Volkswagen Group. However, he emphasized, “Overall, however, the level of earnings we achieved remains unsatisfactory. That is why we will continue our performance enhancement program in the form of ‘ForMotion Plus’, and in particular systematically restructure the core Volkswagen brand.”

He further warned that, “There is no alterative for our Group. Considerable efforts are still needed to safeguard the long-term future of Volkswagen AG. Last year, we already made substantial progress in improving our competitiveness. Nevertheless, nobody in the Group can assume that we have already reached our goals.”

A record 5.24 million vehicles were delivered worldwide to customers in 2005, up 3.2 per cent. Still, the company suffers from the highest industry costs in Germany in its West German plants, and from a decrease in earnings in the U.S. and China, its two key import markets.

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