Volkswagen AG: Interim Report January-June 2006

Volkswagen AG:

Interim Report January-June 2006:
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-- Increase in Volkswagen Group operating profit before special items
by 51.3% year-on-year to EUR 2.0 billion in the first six months
of 2006, but still well below medium-term earnings target

-- Positive one-off factors in the form of gains on the sale of gedas
AG and Volkswagen Bordnetze GmbH (EUR 0.3 billion) and negative
effects resulting from restructuring expenses (EUR -1.3 billion)
reduced Automotive Division operating profit by a net EUR 1.0
billion in the first six months of 2006

-- Automotive Division operating profit after special items lower
than in previous year due to negative one-off factors; Financial
Services operating profit above high prior-year level

-- Gain on sale of Europcar required to be reported separately under
IFRSs as "profit from discontinued operations" presented below
continuing operations in the consolidated income statement. Cash
generated by the sale contributes to increase in Automotive
Division net liquidity to EUR 6.4 billion

-- Group pre-tax profit from continuing operations improves by 17.3%
to EUR 751 million

-- Group products successful:

-- Deliveries to customers up by 11.9% year-on-year to 2.9
million vehicles; increase in market share especially in
Germany and Western Europe

-- All Group brands generate higher sales figures than in the
previous year

-- Full availability of new models drives significant increase in
deliveries in the USA (+16.5%); Passat Lingyu and Jetta
Sagitar primary contributors to increase in deliveries to
customers in China

-- Successful market launch of Eos, Polo GTI and Audi A6 Allroad
quattro; Audi presents new Audi S6, S8 and TT Coupe models

-- Skoda Roomster received positively by the market; sales
figures for new SEAT Leon almost double year-on-year

-- Volkswagen Commercial Vehicles premiers new Crafter at the
Birmingham Motorshow
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January-June 2006 2005*) +/- (%)
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Volkswagen Group:

Deliveries to customers '000 units 2,864 2,559 + 11.9

Vehicle sales '000 units 2,866 2,543 + 12.7

Production '000 units 2,890 2,634 + 9.7

Employees June 30/Dec. 31 329,405 344,902 - 4.5

Continuing operations:

Sales revenue EUR million 51,892 45,446 + 14.2

Operating profit before
special items EUR million 2,029 1,341 + 51.3

Special items EUR million - 995 - x

Operating profit after
special items EUR million 1,034 1,341 - 22.9

Profit before tax from
continuing operations EUR million 751 640 + 17.3

Profit from continuing
operations EUR million 390 379 + 3.1

Profit from discontinued
operations**) EUR million 796 24 x

Profit after tax EUR million 1,186 403 x

Automotive Division (including allocation of consolidation adjustments
between the Automotive and Financial Services divisions):

Cash flows from operating
activities EUR million 6,291 3,333 + 88.7

Cash flows from investing
activities***) EUR million 598 2,675 - 77.7

Net liquidity on June 30 EUR million 6,365 - 1,303 x

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*) Financial data restated.

**) Net gain on disposal of the Europcar group and the Europcar's
current profit after tax for January to May 2006/H1 2005.

***) Excluding acquisition and disposal of equity investments:
EUR 2,113 million (EUR 2,606 million).
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The most important automotive markets recorded robust growth in
the first six months of 2006, despite the difficult macroeconomic
environment. The level of the first half of 2005 was exceeded.
However, high energy and commodity prices, coupled with political
turmoil in the Middle East, will continue to put pressure on the
global economy. Increasing price pressure and continuing unfavorable
exchange rates are exacerbating the situation for automobile
manufacturers. Nevertheless, we are still predicting a modest increase
in global passenger car sales. Demand in the US and Western European
markets is likely to remain stable, and we are expecting slight growth
in the German passenger car market.
We expect our market position to improve in the current year
driven by higher deliveries, especially in Western Europe and the USA.
All brands are represented by new volume models, and our product
rollout will be continued in the second half of the year. We are
expecting delivery figures in the Chinese and South American/South
African markets to increase significantly, and are thus assuming
overall growth in our deliveries to customers.
The resulting increase in sales revenue, combined with the
measures implemented as part of ForMotionplus, will help achieve a
year-on-year improvement in 2006 in operating profit before special
items. We also expect the Automotive Division to record a positive net
cash flow in 2006 and a further improvement in net liquidity compared
with December 31, 2005.

Wolfsburg, July 27, 2006

Volkswagen AG - The Board of Management

(The full interim report is available at "www.volkswagen-ir.de")

This report contains forward-looking statements on the business
development of the Volkswagen Group. These statements are based on
assumptions relating to the development of the economies of individual
countries, and in particular of 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 the actual developments may differ
from those forecast.

Consequently, any unexpected fall in demand or economic stagnation
in our key sales markets, such as Western Europe (and especially
Germany) or in the USA, Brazil or China, will have a corresponding
impact on the development of our business. The same applies in the
event of a significant shift in current exchange rates relative to the
US dollar, sterling, yen, Brazilian real, Chinese renminbi and Czech
koruna.

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Language: English
Issuer: VOLKSWAGEN AG
Brieffach 1970
38436 Wolfsburg Deutschland
Phone: +49 (0)5361 9 - 49840
Fax: +49 (0)5361 9 - 30411
E-mail: gillian.karran@volkswagen.de
WWW: gillian.karran@volkswagen.de
ISIN: DE0007664005
WKN: 766400
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Listed: Amtlicher Markt in Berlin-Bremen, Frankfurt (Prime
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Exchange(s) London, Tokyo
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