Volkswagen AG: Interim Report January-September 2006

Volkswagen AG:

Interim Report January-September 2006:

-0-
*T
-- Increase in Volkswagen Group operating profit before special items
of 62.0% year-on-year to EUR 3.0 billion in the period January to
September 2006, but still below our medium-term Group target

-- Negative one-off effects mainly from restructuring expenses and
positive one-off factors from the sale of equity investments
reduced Automotive Division operating profit by a net EUR 1.7
billion

-- At EUR 628 million, Automotive Division operating profit after
special items 43.9% lower than in previous year; Financial Services
operating profit remains at high prior-year level

-- Gain on sale of Europcar in the second quarter reported as profit
from discontinued operations in the consolidated income statement;
cash generated by the sale strengthens Automotive Division net
liquidity

-- Special items reduced consolidated pre-tax profit from continuing
operations by 7.1% to EUR 937 million year-on-year

-- Consolidated profit after tax rises 76.6% year-on-year to EUR 1.2
billion (previous year: EUR 0.7 billion), even with an
above-average tax rate for continuing activities due to substantial
special items

-- Ratio of investments in property, plant and equipment (capex) to
sales revenue in the Automotive Division at 3.1% (previous year:
4.4%)

-- At EUR 8.2 billion, net liquidity in the Automotive Division
remains at a high level

-- Collective bargaining agreement reached for the restructuring of
Volkswagen AG's six traditional plants

-- New model initiative successfully continued:

-- Deliveries to customers worldwide up by 10.3% year-on-year to
4.3 million vehicles; market share in Germany and Western Europe
increased

-- All Group brands record higher year-on-year sales figures;
Audi, Bentley, Skoda, Lamborghini and Volkswagen Commercial
Vehicles aiming for full-year delivery records

-- New models drive significant growth in deliveries to customers
in the USA (+10.2%) and China (+28.7%)

-- Volkswagen Eos records strong sales figures in cabriolet segment

-- Audi S3, S6 and S8 models and the TT Coupe successfully launched
in the market

-- SEAT presents the Leon Cupra at the London Motor Show

-- 12 world premieres of Group models at the Paris Motor Show and
the IAA Commercial Vehicles

-- Volkswagen acquires 15.06% stake in MAN Aktiengesellschaft as of
October 3
*T

-0-
*T

----------------------------------------------------------------------
January-September 2006 2005 *) +/- (%)
----------------------------------------------------------------------
Volkswagen Group:

Deliveries to
customers '000 units 4,264 3,866 + 10.3
Vehicle sales '000 units 4,220 3,841 + 9.9
Production '000 units 4,233 3,897 + 8.6
Employees Sept. 30/Dec. 31 329,075 344,902 - 4.6

Continuing
operations:
Sales revenue EUR million 77,030 68,912 + 11.8

Operating profit
before special
items EUR million 3,020 1,864 + 62.0
Special items EUR million -1,663 - x
Operating profit
after special
items EUR million 1,357 1,864 - 27.2

Profit before
tax from
continuing
operations EUR million 937 1,009 - 7.1
Profit from
continuing
operations EUR million 413 617 - 32.9

Profit from
discontinued
operations **) EUR million 796 68 x
Profit after tax EUR million 1,209 685 + 76.6

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

Cash flows from
operating
activities EUR million 8,995 5,640 + 59.5
Cash flows from
investing
activities ***) EUR million 1,749 3,945 - 55.7

Net liquidity on
September 30 EUR million 8,194 - 30 x
----------------------------------------------------------------------

*) Financial data restated.
**) Net gain on disposal of the Europcar group and the Europcar's
current profit after tax for January to May 2006/January to
September 2005.
***) Excluding acquisition and disposal of equity investments:
EUR 3,287 million (EUR 3,8 69 million).
*T

Despite the difficult economic environment, the most important
automotive markets proved to be robust in the first nine months of
2006 and recorded slight year-on-year growth. Although oil prices have
recently fallen, we are not expecting any sustained easing of the
situation in the energy and commodity markets. In combination with the
troubled situation in the Middle East, this will continue to dampen
growth. We therefore believe that growth in demand for passenger cars
in the USA, Western Europe and Germany will only be moderate in 2006.

We will continue our product rollout in the fourth quarter, thus
stabilizing this year's improved market position in Western Europe and
Germany. The success of the new models in the US market will be
maintained and will bolster our market position there. We continue to
expect growth in deliveries to customers in China and South
America/South Africa. Consequently we expect overall year-on-year
growth in worldwide delivery figures for 2006.

We will achieve our goal of cutting material costs by at least EUR
1.0 billion in 2006. Driven by the higher unit sales and the success
of ForMotionplus, full-year operating profit before special items will
be higher than in 2005. We expect the Automotive Division to record a
positive net cash flow for the full year and an improvement in net
liquidity compared with December 31, 2005.

Wolfsburg, October 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.

-0-
*T
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
Indices: DAX, Euro Stoxx 50
Listed: Amtlicher Markt in Berlin-Bremen, Frankfurt (Prime
Standard), Hannover, Munchen, Hamburg, Dusseldorf,
Luxembourg, SWX, Stuttgart; Terminborse EUREX; Foreign
Exchange(s) London, Tokyo End of News DGAP News-Service
*T