3rd March 2006.

Pre-tax result rises to 696 million euros/ portfolio increases to 4.2 million contracts

Volkswagen Financial Services AG reports positive business results for the year 2005. Although the total assets were down 3.8 percent to 39.8 billion euros, the reduction was chiefly due to the impact of special items in the previous year. This primarily involved the reserve liquidity maintained for the purchase of LeasePlan Corporation N.V. Without these influences, total assets would have grown by 2.7 percent. The pre-tax result increased by 22.8 percent to 696 million euros. "Apart from the solid business result that was recorded, the first full-year inclusion of the profit contribution of LeasePlan Corporation N.V. and the result from derivative financial instruments have had a positive impact on the pre-tax figures", the Chairman of the Management Board of Volkswagen Financial Services AG, Burkhard Breiing, stressed at the balance-sheet annual press conference in Frankfurt.

The total number of current contracts in the books of Europe's largest provider of automobile-related financial services rose by just under one percent to over 4.2 million, whereby the level of new contracts also increased by around one percent to over 1.5 million.

The receivables from retail financing grew by 4.9 percent reaching 15.5 billion euros. The retail financing portfolio increased by 2.8 percent to more than 1.8 million contracts. The number of new contracts in this domain also went up, namely by 3.2 percent to a figure of 679,000.

For receivables from our leasing business, a rise of 7.2 percent to 11.8 billion euros was recorded. The portfolio declined five percent to 789,000 contracts and the number of new contracts was down 3.8 percent to 299,000. "Both developments are directly connected with the sale of the foreign business division of Europcar Fleet Services GmbH to LeasePlan Corporation N.V., which was concluded in 2005," Breiing explained. Without this divestiture and the associated loss of around 80,000 contracts, the total contract level would have increased by 4.7 percent.

In the field of wholesale (dealer) financing, the credit volume decreased by 2.9 percent to 6.6 billion euros.
The number of insurance agency and service contracts grew by around one percent to 1.6 million contracts. A plus of almost one percent to 524,000 contracts was recorded among the new contracts.

The volume of deposits maintained by the direct banking customers of Volkswagen financial services providers expanded by nine percent during the last business year to a total of 8.7 billion euros. Its share in the overall refinancing of funds thus amounted to 22 percent at the end of the year. The number of the direct bank customers remained approximately at the same level, declining moderately by 1.4 percent to 617,000.

The number of employees in Germany showed an increase of 3.1 percent to a total of 3,595. The respective worldwide figure dropped by 5.4 percent to 4,968 employees as a result of the sale of the non-German subsidiaries of Europcar Fleet Services GmbH.

Strengthening of the market leadership in Europe

"We have set a number of strategic courses during the last year aimed to bolster our position as Europe's market leader among the automotive financial service providers," Breiing revealed. He added: "At the same time, the foundation has been laid for the effective performance of our central task – the promotion of the sale of products of the Volkswagen Group equally well in the future."

Automobile insurances: new business opportunities

As the Chairman specified, one important measure in this respect is the realignment that was carried out regarding the strategic partnership with Allianz in the field of auto insurances. In this context, Volkswagen Financial Services AG is currently in the process of founding its own reinsurance company. "We will then have a much stronger influence in the future on the design of products and rate structures in another central area of the automotive value-added chain," Breiing emphasised. Consequently, this opens up "a whole spectrum of new opportuinities to provide the customer with tailored insurance products at attractive prices."

Responsible for worldwide coordination

Volkswagen Financial Services AG, represented in 35 countries at the end of 2005, has recently become responsible for the coordination of the worldwide financial services activities of the Volkswagen Group. "With this extension of our responsibility, our parent company underlines the importance of the Financial Services domain as its second core competence," Breiing informed. An essential purpose of this reorganisation is to implement uniform steering principles throughout the world, to promote the transfer of know-how, and therefore boost the potential for further growth and generate further contributions to overall profits.

Contact:

Helge K. Hiller
Tel.: +49 (0)5 31 / 2 12 38 10
Fax: +49 (0)5 31 / 2 12 27 27
E-mail: h.hiller@vwfsag.de  

Dietmar Kupisch
Tel.: +49 (0)5 31 / 2 12 32 06
Fax: +49 (0)5 31 / 2 12 27 27
E-mail: d.kupisch@vwfsag.de