DGAP-News: AUDI AG
/ Key word(s): Quarterly / Interim Statement/Quarter Results
AUDI GROUP FROM JANUARY TO SEPTEMBER 2020 - CORE MESSAGES
Fuel/power consumption and CO2 emission figures can be found at the end of the quarterly report.
- KPI'S CONTINUE TO BE IMPACTED BY THE CORONAVIRUS PANDEMIC DESPITE A PLEASING THIRD QUARTER
- Key performance indicators back at or above the prior-year level thanks to market recovery and good operating performance in Q3
- Global drop in demand and interruptions in the supply chain led to production stoppages and short-time working at Audi sites, especially in the first six months - significant impact on delivery volumes and financial performance
- Positive trend expected to continue in the fourth quarter - unless there are further restrictions due to the coronavirus pandemic
-- DELIVERIES OF CARS OF THE AUDI BRAND
- Declined by -13 percent to 1,187,190 (1,357,102) vehicles as the car market fell by -20 percent
- On a cumulative basis, China was 4 percent above prior-year level thanks to strong market demand
- Deliveries to customers were up 6 percent year-on-year in the third quarter thanks to recovery in core markets
- Year-on-year drop overall to EUR 33.3 (41.3) billion, but already 2 percent above prior-year level in the third quarter
-- OPERATING RESULT
- Strong third quarter offset coronavirus-induced losses from the first six months
- Cumulative: EUR 0.1 (3.2) billion [before special items: EUR 0.2 (3.2) billion]
- Special items of EUR -0.1 (-) billion in connection with the diesel issue
-- OPERATING RETURN ON SALES
- At 0.3 (7.8) percent [before special items: 0.7 (7.8) percent]
-- NET CASH FLOW
- EUR 3.8 (3.3) billion due to crisis-related prioritization of investment, active inventory management and one-time effects from transactions relating to participations; net liquidity still high at EUR 21.7 (21.8) billion
-- OUTLOOK FOR 2020 AS A WHOLE
- Deliveries and revenue significantly lower than in prior year; operating result substantially lower, but expected to be clearly positive
- Net cash flow expected to be at prior-year level; return on investment (ROI) probably below prior year and below our minimum rate of return of 9 percent
- R&D ratio below prior-year level despite revenue loss due to coronavirus pandemic; ratio of capex significantly below prior year
- The Audi Group is now cautiously optimistic about the rest of the year, but it is hardly possible to estimate the impact of the second wave of the corona pandemic reliably.
- GLOBAL SPREAD OF CORONAVIRUS (SARS-COV-2)
At the end of December 2019, the first cases of a disease caused by a new type of virus from the coronavirus family (SARS-CoV-2) were reported in China. The number of people infected worldwide rose sharply in the first nine months of 2020 - although there were regional differences in the intensity of the outbreaks. To slow the spread of SARS-CoV-2 and contain the resulting pandemic, many governments around the world have introduced measures since the first quarter of 2020. These include lockdowns, for example, which have led to massive restrictions on public life and economic activity.
- Volkswagen AG INITIATES THE FULL TAKEOVER OF AUDI SHARES
As part of the realignment of competences and responsibilities in the Volkswagen Group, the company Volkswagen AG, Wolfsburg, has initiated a squeeze-out under German stock corporation law to increase its shareholding in AUDI AG, Ingolstadt, from 99.64 percent at present to 100 percent. In an ad hoc announcement issued on June 16, 2020, AUDI AG reported that Volkswagen AG had set the cash settlement for the transfer of the shares in AUDI AG held by minority shareholders at EUR 1,551.53 per share. On July 31, 2020, the 131st Annual General Meeting of AUDI AG passed a resolution to transfer the shares held by the minority shareholders to the majority shareholder, Volkswagen AG. This resolution will become effective when it is entered in the commercial register. The minority shareholders will then receive the aforementioned cash settlement as consideration for the transfer of their shares. Employee codetermination, the independence of the Audi brand within the Volkswagen Group and the legal form of AUDI AG as a German stock corporation (Aktiengesellschaft) will not be affected by the squeeze-out.
BUSINESS AND UNDERLYING SITUATION 1)
Growth in the gross domestic product and car markets of selected countries/regions
1) The prior-year figures may have changed as a result of updated data; provisional figures for the first nine months of 2020.
- GLOBAL ECONOMIC SITUATION
As a consequence of the global spread of coronavirus, during 2020 many governments imposed restrictive measures - for example, the closure of borders and extensive contact restrictions - which led to a massive curtailment of public life and economic activity. At the same time, in some cases considerable fiscal and monetary policy measures were adopted to counter the anticipated economic crisis. Due to the resulting drop in demand and supply, global economic output fell significantly, by -4.5 (2.6) percent in the first nine months of 2020 compared with the same period of the previous year. The impact varied greatly from one country to another as there were time differences in the spread of the virus and the associated measures. The comparatively low interest rates worldwide dropped further in the reporting period. The currencies of some emerging markets depreciated considerably against the euro in the first nine months of 2020. On the financial markets, security prices were highly volatile in the reporting period.
- INTERNATIONAL CAR MARKET
Global demand for passenger cars dropped by -20.2 percent to 47.3 (59.3) million vehicles year-on-year between January and September 2020 due to the coronavirus pandemic. All regions were affected by this downturn. Above-average declines were reported, in particular, by the Western Europe region, where demand fell by -29.5 percent to 7.8 (11.1) million vehicles. Significant declines were also reported in Central and Eastern Europe, where demand dropped by -19.6 percent to 2.0 (2.5) million vehicles, in China including Hong Kong, with a drop of -12.3 percent to 13.4 (15.2) million vehicles, and the USA, where demand fell by -18.9 percent to 10.3 (12.8) million vehicles.
- INTERNATIONAL MOTORCYCLE MARKET
From January to September 2020, the motorcycle markets in the displacement segment above 500 cc recorded a drop in demand of -4.9 percent due to the pandemic. The worldwide motorcycle markets developed at very different rates, with some markets already showing a recovery compared with the situation after the first six months.
In the first three quarters of 2020, the Audi Group produced a total of 1,131,660 (1,321,501) cars and 34,108 (44,392) motorcycles. The premium Audi brand accounted for 1,126,555 (1,315,009) cars. This figure includes 464,991 (418,140) Audi vehicles built locally by the associate FAW- Volkswagen Automotive Company, Ltd., Changchun (China). Automobili Lamborghini S.p.A. built 5,105 (6,492) vehicles of the Lamborghini brand at its company headquarters in Sant'Agata Bolognese (Italy) in the reporting period.
The -14.4 percent decline in the Automotive segment compared with the prior-year period is principally attributable to the global economic situation in the context of the spread of coronavirus. During the first quarter of 2020, we therefore adjusted production, not simply because of the significant reduction in demand, but also in response to supply chain difficulties and factory shutdowns ordered by the authorities in some countries. The production stoppages at the Chinese facilities mainly had an impact in February 2020. The production volume in China stabilized gratifyingly as early as March, and by the end of September 2020 there was actually a cumulative year-on-year rise of 11.2 percent. In the reporting period, the Audi Q3 Sportback was produced locally in Tianjin (China) for the first time by the associate FAW- Volkswagen Automotive Company, Ltd., Changchun (China). Moreover, following the start of production of the Audi Q2 L e-tron in Changchun (China) in 2019, local production of a second fully electric vehicle - the Audi e-tron - started at this site in the third quarter of 2020. Following expansion of the factory in Qingdao (China), production of the Audi A3 Sportback in the fourth generation of the Audi A3 family commenced there. From mid-March 2020, there was a controlled production shutdown at the European sites owing to the coronavirus pandemic. Production was restarted stepwise from the end of April 2020. Our site in San José Chiapa (Mexico) was only able to restart production in June 2020 as the pandemic spread later in Mexico. The situation in our production network continued to stabilize in the third quarter of 2020, and between July and September 2020 we were able to increase output by 13.8 percent year-on-year as a follow-on effect of the previous pandemic-induced declines.
Worldwide, the Audi Group produced 456,013 (400,824) vehicles and 9,951 (9,633) motorcycles in the third quarter of 2020. Of the total number of cars produced, the Audi brand accounted for 454,139 (398,925) units. 186,395 (151,036) Audi vehicles were manufactured by the associate FAW- Volkswagen Automotive Company, Ltd., Changchun (China). The Lamborghini brand produced 1,874 (1,899) vehicles.
Production of Audi brand cars by site
Car production by model 1)
The Audi Group produced a total of 1,166,731 (1,527,356) engines and electric powertrains in the first three quarters of 2020. Output declined by -23.6 percent compared with the prior-year period due to the effects of the coronavirus pandemic. Audi Hungaria Zrt. in Győr (Hungary) responded with a controlled production stoppage in mid-March. However, production of engines and electric powertrains resumed in stages from mid-April 2020. Due to the rising demand for cars, from August 2020 production of engines and electric powertrains was higher than in the respective months of the previous year. As a result, in the third quarter of 2020 production was only -3.6 percent lower than in the prior-year period.
Worldwide, the Ducati brand produced a total of 34,108 (44,392) motorcycles in the first nine months of 2020. The -23.2 percent decrease is likewise attributable to the effects of the coronavirus pandemic. 26,999 (36,999) units were built at the company headquarters in Bologna (Italy). In the same period, Ducati also produced 6,196 (6,789) motorcycles at the Amphur Pluakdaeng site in Thailand. In addition, 913 (604) motorcycles were built in Manaus (Brazil) on a contract manufacturing basis.
1) The figures for the prior-year period have been marginally adjusted.
Deliveries of Audi brand cars to customers by region
In April 2020, the new generation of the Audi A3 family was presented to dealers exclusively digitally for the first time, starting with the Audi A3 Sportback, and successively launched on markets. The Audi A3 Sedan was introduced in July 2020; a version with natural gas drive and a plug-in hybrid model will be added to the portfolio by the end of the year.
Car deliveries to customers by model 2)
2) The table includes deliveries of 477,497 (446,330) vehicles built locally by the associate FAW- Volkswagen Automotive Company, Ltd., Changchun (China).
3) This includes 3,036 (-) fully electric Audi Q2 L e-tron models for the Chinese market.
The Ducati brand delivered 38,789 (43,826) motorcycles to customers worldwide between January and September 2020. Here too, the decline of -11.5 percent compared with the previous year was due to the worldwide spread of coronavirus. Delivery figures in the Motorcycles segment have also recovered noticeably since the restrictions started to be relaxed. In the third quarter of 2020, deliveries were 21.4 percent higher than in the same period of 2019.
In the third quarter of 2020, deliveries of the Audi Group increased to 482,066 (452,899) vehicles worldwide. The Audi brand delivered a total of 479,965 (450,922) models, including 193,676 (167,054) built locally by FAW- Volkswagen Automotive Company Ltd., Changchun (China). Between July and September 2020, the Lamborghini brand delivered a total of 2,083 (1,964) vehicles worldwide, while the Ducati brand's delivery volume was 14,694 (12,104) motorcycles in the same period.
New model, no predecessor // New model // Product improvement
Ducati models introduced in the period under review
The Panigale V2 with numerous improvements in terms of design and performance was the first new model to be available at dealers in 2020. The new Panigale V4 with a range of optimizations is already available from dealers, too.
- CHANGES TO THE GROUP OF CONSOLIDATED COMPANIES
Since January 1, 2020, the Volkswagen Group has consolidated participations and subsidiaries that develop software in the vehicle and for further digital applications in the Car. Software AG organization. In this connection, in January 2020, Audi sold Audi Electronics Venture GmbH, Gaimersheim, which had been included in the consolidated financial statements as a fully consolidated holding company without its own business operations until December 31, 2019.
On July 12, 2019, Volkswagen AG, Wolfsburg, announced that, together with Ford Motors Corporation, Dearborn (USA), it would invest in Argo AI, Pittsburgh (USA), a company that specializes in software platforms for autonomous driving, and that this would be effected, among other things, by the contribution of Autonomous Intelligent Driving GmbH, Munich, a fully consolidated subsidiary of AUDI AG. The contribution of Autonomous Intelligent Driving GmbH was made as of June 1, 2020. Prior to that, AUDI AG had sold the company within the Volkswagen Group.
There were no other changes to the group of consolidated companies.
- INVESTMENTS IN ASSOCIATES
At the start of 2020, AUDI AG held 5 percent of the shares in FAW- Volkswagen Automotive Co., Ltd., Changchun (China), which, among other activities, produces and distributes Audi brand vehicles for the Chinese market. On May 15, 2020, AUDI AG entered into a trust agreement under which it transferred the beneficial ownership of 4 percent of the shares of FAW- Volkswagen Automotive Co., Ltd., to Volkswagen AG. This means that the share of the investment accounted for using the equity method is now measured on the basis of an interest of 1 percent. Through its representation in this company's management and supervisory board, AUDI AG remains in a position to exercise significant influence.
In January 2020, a capital increase was implemented at THERE Holding B.V., Rijswijk (Netherlands), in which Audi participated. In December 2019, it was announced that additional investors would acquire shares in HERE International B.V., Eindhoven (Netherlands). Following the signing in December 2019, and approval by all antitrust authorities, Mitsubishi Corporation (MC), Tokyo (Japan), and Nippon Telegraph and Telephone Corporation of Japan (NTT), Tokyo (Japan), jointly acquired 30 percent of the shares in HERE International B.V. as of May 29, 2020. The interest held by THERE Holding B.V. in HERE International B.V. was consequently reduced from approximately 85 percent to approximately 60 percent. In connection with the sale of the shares, a capital decrease was implemented at the level of THERE Holding B.V. in June 2020 and September 2020. Audi 's interest in THERE Holding B.V. continues to amount to around 29.7 percent.
- FINANCIAL PERFORMANCE
The Audi Group generated revenue of EUR 33,264 (41,332) million in the first nine months of 2020. The year-on-year decline was mainly due to lower demand in the first six months in connection with the coronavirus pandemic.
In the Motorcycles segment, the Ducati brand generated revenue of EUR 509 (567) million. The decrease is also attributable to the effects of the coronavirus pandemic.
Key operating performance figures, Audi Group
1) Effects of purchase price allocation
In the Motorcycles segment, the operating result was EUR 16 (39) million in the first nine months of 2020 due to the pandemic. This represents an operating return on sales of 3.1 (6.9) percent. After elimination of the effects of purchase price allocation, our operating profit came to EUR 29 (56) million and the operating return on sales was 5.6 (9.9) percent.
Financial result, Audi Group
1) Financial brand settlement agreed between AUDI AG and Volkswagen AG, Wolfsburg, for China business in connection with associates.
2) Includes the items FAW- Volkswagen Automotive Company, Ltd., Volkswagen Automatic Transmission (Tianjin) Company Limited, SAIC Volkswagen Automotive Company Ltd., and brand settlement for China business.
The Audi Group generated revenue of EUR 12,788 (12,571) million in the third quarter of 2020.
- NET WORTH
As of September 30, 2020, the balance sheet total of the Audi Group decreased to EUR 65,122 (66,878) million compared with the position as of December 31, 2019.
Condensed balance sheet, Audi Group
The non-current assets of the Audi Group amounted to EUR 32,668 (34,211) million. The development was driven principally by the decline in property, plant and equipment resulting from crisis-induced investment prioritization as an active measure to manage liquidity.
Current assets totaled EUR 32,454 million as of September 30, 2020, compared with EUR 32,422 million as of December 31, 2019.
The equity of the Audi Group rose to EUR 29,647 (28,395) million as of September 30, 2020. This represents an equity ratio of 45.5 percent, compared with 42.5 percent as of December 31, 2019. The increase in equity was mainly due to higher reserves.
At the end of the first three quarters of 2020, non-current liabilities changed to EUR 17,088 million compared with EUR 16,212 million at the end of 2019.
The current liabilities of the Audi Group declined to EUR 18,387 million compared with EUR 22,219 million as of December 31, 2019. The decline was attributable primarily to the transfer of the profit for 2019 to Volkswagen AG, Wolfsburg, in the first quarter of 2020.
- FINANCIAL POSITION
The Audi Group generated a cash flow from operating activities of EUR 3,996 (5,791) million in the first nine months of 2020. The decline was principally due to lower earnings as a result of the pandemic. One positive effect came from working capital management - also due to the change in inventories. Overall, the net cash flow of the Audi Group was EUR 3,783 (3,271) million in the period from January to September 2020. The decline in the cash flow from operating activities year-on-year was more than offset, principally by the divestment of participations and greater investment discipline (capex).
As of September 30, 2020, the net liquidity of the Audi Group was EUR 21,680 million, compared with EUR 21,754 million as of December 31, 2019.
Condensed cash flow statement, Audi Group
In view of the difficult economic conditions caused by the coronavirus pandemic, AUDI AG and employee representatives agreed to introduce short-time working at the Ingolstadt and Neckarsulm sites from March 2020. In particular, a drop in demand and supply chain bottlenecks due to the coronavirus pandemic resulted in work stoppages in various direct and indirect areas of the Company. Between the end of March and the end of August 2020, an average of around 18,000 employees were working short-time. There was no short-time working at the German sites in September. To reduce contact between employees to an absolute minimum, stringent safety precautions have been introduced at the sites. In those areas where employees' personal presence is not absolutely necessary to maintain business operations, employees make use of the increased possibility of working from home. The controlled, stepwise restart of production was driven forward in the second quarter of 2020, while respecting all health and safety aspects. By the end of the second quarter, all production sites had resumed operation. The situation in our production network stabilized further in the third quarter of 2020. The Company's duty to protect its employees and their health continues to have top priority.
In September 2020, around 680 young people embarked on vocational training or a combined vocational and university training course at AUDI AG in Ingolstadt and Neckarsulm.
Furthermore, in the first half of 2020, more than 1,300 employees took up the early-retirement program offered in connection with the " Audi .Zukunft" agreement. These employees left the company effective July 1, 2020.
REPORT ON EXPECTED DEVELOPMENTS, RISKS AND OPPORTUNITIES
- REPORT ON EXPECTED DEVELOPMENTS
The Board of Management of AUDI AG anticipates that growth in the world economy will be negative in 2020 as a consequence of the spread of the coronavirus SARS-CoV-2. In addition, we still see risks resulting from protectionist tendencies, turbulence on the financial markets and structural deficits in individual countries. Moreover, growth prospects will be negatively affected by continuing geopolitical tension and conflicts. We assume that the economic development of both advanced economies and emerging markets will decline markedly this year. Nevertheless, we currently expect the present economic recovery to continue in the remainder of 2020.
In light of the coronavirus pandemic, we have drawn up scenarios for the development of the passenger car markets in individual regions in 2020. These take into account current experience from the development in China, for example. The scenarios reflect geographical differences in the spread of the coronavirus pandemic. Overall, we predict a year-on-year reduction of between 15 and 20 percent in global demand for new vehicles.
In the motorcycle markets that are relevant for the Ducati brand in the displacement segment above 500 cc, we anticipate an overall decline in the worldwide market in 2020 due to the coronavirus pandemic.
The Audi Group is now cautiously optimistic about the rest of the year, but it is hardly possible to estimate the impact of the second wave of the corona pandemic reliably. Subject to this development, Audi is currently anticipating the following key performance indicators for the 2020 fiscal year:
At present, we also expect the Audi Group's operating result to be substantially lower than the prior-year level, but still clearly positive. In addition to the negative market trend, we continue to assume negative currency and raw material valuation effects for Audi in 2020 as a whole, mainly because of the coronavirus pandemic.
For the 2020 fiscal year, we forecast that the Audi Group's return on investment (ROI) will decline year-on-year and that it will also be below our minimum rate of return of 9 percent. The reduction is principally attributable to the forecast drop in the operating result.
At present, we expect the net cash flow for the 2020 fiscal year to be at the prior-year level, despite the coronavirus pandemic.
Although revenue will be considerably lower than in the prior year, we currently assume that in the 2020 fiscal year the research and development ratio will be below the prior-year level. This is mainly due to lower development costs resulting from pooling software development within the Volkswagen Group in the Car. Software AG organization.
In connection with the coronavirus pandemic, since March 2020 we have been reviewing investments in particular. Although revenue development is currently expected to be negative, we forecast that the ratio of capex will be significantely below the prior-year level.
- REPORT ON RISKS AND OPPORTUNITIES
The central task of risk and opportunity management is to systematically render risks transparent and improve their controllability, while also providing the impetus to generate or exploit opportunities. The priority is to increase the value of the company.
The function of the risk and opportunity management system as well as the opportunities and risks that influence the Audi Group are presented in detail on pages 89 to 108 of the Audi 2019 Financial Report. The statements made there on the risk situation for the 2020 fiscal year are still fundamentally valid. There have been some changes in individual risks within the reported risk categories. These are explained below. The operational risks (quarterly risk process) were updated in the third quarter of 2020 and the update was presented in detail to the top management at Audi . It was also reported to the Volkswagen Group.
-- RISKS FROM GENERAL ECONOMY, INDUSTRY AND MARKETS
The risk situation in connection with the coronavirus pandemic increased after publication of the Audi 2019 Financial Report, especially in the first half of 2020, but decreased again in the third quarter. In particular, the measures taken by many governments around the world had a major impact on sales and production volumes, especially in the first six months of 2020. The altered risk situation was outlined in the report on risks and opportunities in the Audi Group's interim report on the first quarter of 2020.
-- OPERATIONAL RISKS
For procurement, the Audi Group uses a worldwide network of suppliers. In principle, contractual agreements may result in compensation claims from suppliers in the event of significant deviations in call-off volumes, and these could be utilized in individual cases. This risk is countered by active management of demand capacity as well as continuing negotiations with our suppliers.
-- SALES RISKS
There is a fundamental risk to market supply through our global dealer network in connection with possible changes in the Company's strategic direction, in China for example. Volume and profit risks could result from this. Overall, this risk has increased since the 2019 Financial Report. Risk management is conducted by means of an ongoing exchange with our partners on the specific structure of our collaboration, optimization of the distribution system and customer studies. It also includes regular reporting to top management.
-- LEGAL RISKS
In June 2020, the Munich II Regional Court accepted the substantially unchanged indictment of the Munich II Office of the Public Prosecutor, which also names the former Chairman of the Board of Management of AUDI AG, and opened the main trial proceedings on charges of, among other things, fraud in connection with the diesel issue involving 3.0-liter and 4.2-liter TDI engines. Trial proceedings commenced in September 2020. In August 2020, the Munich II Office of the Public Prosecutor issued a further indictment charging three former Members of the Board of Management of AUDI AG and others with, among other things, fraud in connection with the diesel issue involving 3.0-liter and 4.2-liter TDI engines.
In April 2020, the court in Australia approved the class action settlement that the parties, including AUDI AG, had agreed to.
In April 2020, several European countries, including the Netherlands and France, filed class actions against Volkswagen AG and other Group companies, including AUDI AG. The class actions involve several diesel engines, including the EA189 and V-TDI among others.
In February 2020, the Montana State Court dismissed certain of the environmental claims asserted by the Montana Attorney General, but allowed other claims to proceed. In August 2020, the Montana Supreme Court declined on procedural grounds to grant Volkswagen 's petition to review that decision. In March 2020, the Ohio Supreme Court, at Volkswagen 's request, agreed to hear an appeal of a lower court's decision concerning Ohio's remaining claims. In June 2020, the U.S. Court of Appeals for the Ninth Circuit partially reversed the trial court's decision and held that Hillsborough County, Florida and Salt Lake County, Utah can proceed with a subset of their claims. In September 2020, the U.S. Court of Appeals for the Ninth Circuit stayed proceedings in the litigation pending Volkswagen 's anticipated petition for review by the US Supreme Court.
In connection with the factual matters that in principle also underlie the antitrust proceedings instituted by the European Commission against Volkswagen AG, AUDI AG, and Dr. Ing. h.c. F. Porsche AG in April 2019 as well as the proceedings pending with the Chinese competition authority, the South Korean competition authority searched the premises of Audi Volkswagen South Korea and Porsche South Korea in May 2020 and issued requests for information to Volkswagen AG, AUDI AG, and Dr. Ing. h.c. F. Porsche AG. Furthermore, the Turkish competition authority commenced proceedings in the same matter in July 2020.
In March 2020, the U.S. District Court for the Northern District of California dismissed two amended class action complaints brought by purchasers of German luxury vehicles alleging that several automobile manufacturers, including Volkswagen AG and other Group companies, conspired to unlawfully increase the prices of German luxury vehicles in violation of U.S. antitrust and consumer protection law. The court held that the plaintiffs have not stated a claim for relief because the allegations in the complaints do not plausibly support that the alleged agreements unreasonably restrained competition in violation of U.S. law. The court granted plaintiffs leave to file amended complaints with respect to a limited subset of plaintiffs' original claims. Plaintiffs filed a second set of amended complaints in June 2020, which the Defendants moved to dismiss in August 2020. In October 2020, the court granted Defendants' motion and dismissed with prejudice the amended complaints in their entirety. Plaintiffs may appeal this ruling.
In February 2020, the U.S. District Court for the Northern District of California granted final approval of a class action settlement resolving civil claims relating to approximately 98 thousand Volkswagen , Audi , Porsche and Bentley vehicles with automatic transmissions.
In October 2020, plaintiffs filed three complaints in the US District Court for the Northern District of California, seeking to represent a putative class of US purchasers and lessees of certain Porsche gasoline-powered vehicles. One complaint names as defendants AUDI AG among others.
The term of the Independent Compliance Monitor retained pursuant to the Plea Agreement expired in September 2020, whereas that of the Independent Compliance Auditor under the Third Partial Consent Decree and the Third California Partial Consent Decree ended earlier, in June 2020.
-- FINANCIAL RISKS
The automotive industry's transformation led to increased uncertainty on the capital market regarding the future value of the Company. There was a risk that analysts and investors might place Audi and the Volkswagen Group in a much higher risk category, in the absence of established measurement models. This risk was reviewed in the second quarter of 2020, leading to the conclusion that the operationalization of the strategic realignment underpins the future viability of AUDI AG and counters this risk, so this risk is no longer reportable as part of the standardized risk process.
There were no other material changes in the reporting period compared with the statements made on the expected development of the Audi Group in the 2020 fiscal year in the sections "Report on Expected Developments" and the "Report on Risks and Opportunities" - including the section on legal risks - of the combined management report in the 2019 Financial Report. In particular, based on existing and acquired information, there continue to be no conclusive findings or assessments available to the Board of Management of AUDI AG regarding the described facts that would result in a different assessment of the associated risks.
EVENTS OCCURRING SUBSEQUENT TO THE REPORTING DATE
There were no reportable events of material significance after September 30, 2020.
The table shows the fuel/power consumption and emission figures for the passenger cars mentioned in the document.
We are currently still required by law to state the NEDC figures. In the case of new vehicles which have been type-approved according to the WLTP, the NEDC figures are derived from the WLTP data. It is possible to specify the WLTP figures voluntarily in addition until such time as this is required by law. In cases where the NEDC figures are specified as value ranges, these do not refer to a particular individual vehicle and do not constitute part of the sales offering. They are intended exclusively as a means of comparison between different vehicle types. Additional equipment and accessories (e.g. add-on parts, different tire formats, etc.) may change the relevant vehicle parameters, such as weight, rolling resistance and aerodynamics, and, in conjunction with weather and traffic conditions and individual driving style, may affect fuel consumption, electrical power consumption, CO2 emissions and the performance figures for the vehicle.
Further information on official fuel and power consumption figures and the official specific CO2 emissions of new passenger cars can be found in the "Guide on the fuel economy, CO2 emissions and power consumption of all new passenger car models," which is available free of charge at all sales dealerships and from DAT Deutsche Automobil Treuhand GmbH, Hellmuth-Hirth-Str. 1, 73760 Ostfildern, Germany or at www.dat.de.
This report contains forward-looking statements on the future business development of the Audi Group. These statements are based on assumptions relating to the development of the economic, political and legal environment in individual countries and economic regions, and in particular for the automotive industry, which we have made on the basis of the information available to us and which we consider to be realistic at the time of going to press. The estimates given entail a degree of risk, and actual developments may differ from those forecast. If there are any changes in significant parameters relating to our key sales markets or any significant shifts in exchange rates or commodity prices relevant to the Audi Group or if the actual effects of the coronavirus pandemic differ from the scenario assumed in this report, this will have a corresponding effect on the development of our business. In addition, there may be departures from our expected business development if the assessments of the factors affecting long-term value creation as well as of the risks and opportunities presented in the 2019 Financial Report develop in a way other than we are currently expecting, or if additional risks and opportunities or other factors emerge that affect the development of our business.
The figures in brackets represent those for the corresponding prior-year period. All figures are rounded off, which may lead to minor deviations when added up.
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