Q1 2026 Volkswagen AG Earnings Call - Media Q&A

April 30, 2026

Speaker #1: This is, as usual, a joint call for both the media as well as investors and analysts. Moderated by Rolf Woller, our head of treasury and investor relations, and myself, Pietro Zollino, head of corporate communications.

Pietro Zollino: This is, as usual, a joint call for both the media as well as investors and analysts, moderated by Rolf Woller, our Head of Treasury and Investor Relations, and myself, Pietro Zollino, Head of Corporate Communications. With us today are Oliver Blume, our CEO of the Volkswagen Group, and Arno Antlitz, CFO and COO of Volkswagen Group. You should have received the press release, the interim financial report, and all other related materials which were published already this morning. If you do not have them, you can find all documents on our group website. In case of any issue, give us a call or drop us an email. Let me hand over to Rolf, who will give you a brief run-through of the next, let's say, one and a half hours. Thank you.

Speaker #1: With us today are Oliver Blume, our CEO of the Volkswagen Group, and Arno Antlitz, CFO and COO of Volkswagen Group. You should have received the press release, the interim financial report, and all other related materials which were published already this morning.

Speaker #1: If you do not have them, you can find all documents on our group website. In case of any issue, give us a call or drop us an email.

Speaker #1: Now let me hand over to Rolf, who will give you a brief run-through of the next essay, one and a half hours. Thank you.

Speaker #2: Thank you, Pietro. good morning to everyone. From a very sunny day in Wolfsburg, thank you for joining us today. let's have a look at our agenda.

Rolf Woller: Thank you, Pietro. Good morning to everyone from a very sunny day in Wolfsburg, and thank you for joining us today. Let's have a look at our agenda. Oli will start with the financial highlights of the first quarter and will then present our transformation plan towards the Volkswagen Group Target Picture 2030. Arno will go on with the key developments of the first quarter, and after that, we will take a closer look at the financial results and the full-year outlook 2026. Following the presentation, we will first host a Q&A session with Oli and Arno for the investor and analyst community, moderated by myself. After the session, we will have a short break before we continue with the media Q&A, which will then be hosted by Pietro.

Speaker #2: Ollie will start with the financial highlights of the first quarter. And we'll then present our transformation plan, plan towards the Volkswagen Group target picture 2030.

Speaker #2: Arno will go on with the key developments of the first quarter. And after that, we will take a closer look at the financial results and the full year outlook 2026.

Speaker #2: Following the presentation, we will first host the Q&A session with Ollie and Arno for the investor and analyst community. Moderated by myself. And after the session, we will have a short break before we continue with the media Q&A, which will then be hosted by Pietro.

Speaker #2: Since today's call includes forward-looking statement, the safe-haver language, and other cautionary statements on the slide, we'll govern today's presentation. I encourage you to read the disclaimer carefully, as all forward-looking statements are qualified by this language.

Rolf Woller: Since today's call includes forward-looking statement, the safe harbor language and other cautionary statement on the slide will govern today's presentation. I encourage you to read the disclaimer carefully, as all forward-looking statements are qualified by this language. In the interest of time, I will not read it to you. With that, I hand it over to Oli. Oli, please go ahead.

Speaker #2: In the interest of time, I will not read it to you. And with that, I hand it over to Ollie, Ollie, please go ahead.

Speaker #1: Thank you, Rolf. Thank you, Pietro. Good morning, ladies and gentlemen, also a warm welcome. Let me start, with a highlight here to date. Our model momentum in Europe continues.

Oliver Blume: Thank you, Rolf. Thank you, Pietro. Good morning, ladies and gentlemen. Also, a warm welcome. Let me start with a highlight. Year to date, our model momentum in Europe continues. Importantly, the first two of a series of new vehicles of the electric urban car family have been launched to the market, the Cupra UrbanRebel and yesterday, the ID. Polo, books are now open for customer orders. In China, we are switching to delivery mode with our In China, for China strategy. The Beijing Auto Show marked an impressive start of our model offensive, with locally developed NEVs geared to Chinese customers' taste and highly competitive in terms of technologies and costs. In the US, Volkswagen Chattanooga assembly plant will shift to higher volume models, such as the second generation of the Atlas, which will be in the showrooms from fall.

Speaker #1: Importantly, the first two of a series of new vehicles of the electric urban car family have been launched to the market. The Cupra Raval and, yesterday, the ID.

Speaker #1: Polo. And, books are now open for customer orders. In China, we are switching to delivery mode with our In China for China strategy. The Beijing Auto Show marked an impressive start of our model offensive, with locally developed NEVs geared to Chinese customers' taste and highly competitive in terms of technology and costs.

Speaker #1: In the US, Volkswagen's Shetanduga assembly plant will shift to higher volume models, such as the second-generation of the Atlas, which will be in the showrooms from fall.

Speaker #1: While the electrical ID. 4 still is available in the US, we decided to end local production on the ID. 4 from April 2026. The Rivian Volkswagen technology joint venture successfully completed winter testing of the first vehicles, equipped with the newly developed software defined vehicle architecture.

Oliver Blume: While the electrical ID.4 still is available in the US, we decided to end local production on the ID.4 from April 2026. The Rivian Volkswagen technology joint venture successfully completed winter testing of the first vehicles equipped with a newly developed software-defined vehicle architecture. Lastly, we continued the implementation of our active portfolio management. Traton reduced the holding in Sinotruk, recording a cash inflow of EUR 0.2 billion in Q1. A second step followed in April in the magnitude of EUR 400 million. In addition, Porsche has closed an agreement to sell its stake in Bugatti Rimac Group. Closing of the transaction is contingent on regulatory approvals. Looking at the financial highlights, deliveries to customers were down 4% in Q1, mainly due to the declines in US and China. Nevertheless, we kept our global market share stable.

Speaker #1: Lastly, we continued the implementation of our active portfolio management. Traton reduced the holding in Sinotruck, recording a cash inflow of 0.2 billion in the first quarter, a second step followed in April in the magnitude of 400 million.

Speaker #1: In addition, Porsche has closed an agreement to sell its stake in Bugatti Rimac Group, closing off the transaction is contingent on regulatory approvals. Looking at the financial highlights, deliveries to customers were down 4% in quarter one, mainly due to the declines in US and China.

Speaker #1: Nevertheless, we kept our global market share stable. Our order book situation in Europe remains very encouraging. It shows that our new vehicles are resonating well with customers.

Oliver Blume: Our order book situation in Europe remains very encouraging. It shows that our new vehicles are resonating well with customers. Revenues in Q1 were down 2%, in line with the unit sales decline, excluding China joint venture volumes. Automotive net cash flow was strong at around EUR 2 billion. This shows that the working capital measures implemented last year by Arno and the teams are delivering lasting results. Net liquidity was almost on par with year-end 2025, despite the redemption of EUR 1.75 billion hybrid bond in February. Group operating profit stood at EUR 2.5 billion against the backdrop of increased geopolitical tension and declining vehicle markets, as well as again significant special effects. The achieved return on sales of 3.3% is a solid result.

Speaker #1: Revenues in the first quarter were down 2% in line with the unit sales decline excluding China joint venture volumes. Automotive net cash flow was strong at around 2 that the working capital measures implemented last year by Arno and the teams are delivering lasting results.

Speaker #1: Net liquidity was almost on par with year-end 2025, despite the redemption of 1.75 billion euros hybrid bond in February. Group operating profit stood at 2.5 billion euros, against the backdrop of increased geopolitical tension and declining vehicle markets, as well as again significant special effects that achieved return on sales of 3.3% is a solid result.

Speaker #1: But, we must also be clear. Our current business model and the changed environment is not generating sufficient returns. Even before special effects, our margin is at 4.3% only.

Oliver Blume: We must also be clear, our current business model in the changed environment is not generating sufficient returns. Even before special effects, our margin is at 4.3% only. US tariffs are not included in the special effects. This is clearly too low to finance future investments, pay attractive dividends, and strengthen our financial position at the same time. We must and will continue to reduce complexity, focus investments on what wins customers and continue execution across the group while navigating industrial transformation, geopolitical uncertainty, and stagnant revenue prospects in our industry, especially in Europe. The need for action was clearly recognized in 2023. A comprehensive realignment was therefore kicked off and communicated in June of that year in a capital markets day. Since then, a comprehensive action plan has been put into implementation across the key success factors, products, regions, software, and cost programs.

Speaker #1: US tariffs are not included in the special effects. This is clearly too low to finance future investments, pay attractive dividends, and strengthen our financial position at the same time.

Speaker #1: For members of the media, as a reminder, to ask a question, you will need to press *1 and then 1—so *11—on your telephone. This is different than we had it in previous calls.

Pietro Zollino: Of the media. As a reminder to ask a question, you will need to press star 1 and 1. star 11 on your telephone. That's different than we had it in the previous calls. Wait for your name to be announced, please. If you want to withdraw your question, it's the same procedure. Please press star 1 and 1. The first question comes from Frank Schwope from DPA. Please, Frank. Okay, I think we have an issue here. Maybe we will start with Christina Amann. Christina, you wanna start, please? Unfortunately, we can't hear you. There seems to be technical issues.

Pietro Zollino: Of the media. As a reminder to ask a question, you will need to press star one and one. Star 11 on your telephone, that's different than we had it in the previous calls. Wait for your name to be announced, please. If you want to withdraw your question, it's the same procedure. Please press star one and one. The first question comes from Frank Johannsen from DPA. Please, Frank. Okay, I think we have an issue here. Maybe we will start with Christina Amann. Christina, you wanna start, please? Unfortunately, we can't hear you. There seems to be technical issues.

Speaker #1: We must and will continue to reduce complexity, focus investments on what wins customers, and continue execution across the group while navigating industrial transformation, geopolitical uncertainty, and stagnant revenue prospects in our industry especially in Europe.

Speaker #1: And wait for your name to be announced, please. If you want to withdraw your question, it's the same procedure. Please press *1 and 1.

Speaker #1: And the first questions come question comes from Frank Johansen from DPA. Please, Frank. Okay, I think we have an issue here, so then maybe we will start with Christina Amman.

Speaker #1: The need for action was clearly recognized in 2023, a comprehensive realignment was therefore kicked off and communicated in June of that year in a capital markets day.

Speaker #1: Christina, do you want to start, please? Fortunately, we can't hear you. Okay, it seems there are technical issues.

Speaker #1: Since then, a comprehensive action plan has been put into implementation across the key success factors. Products, regions, software, and cost programs. We have already made great progress.

Oliver Blume: We have already made great progress. These achievements helped offset significant earnings headwinds and enabled us to regain the competitive flexibility and freedom to act that we need. At the same time, from 2025 onward, headwinds intensified further, driven by geopolitics, tariffs, and accelerated competition, particularly in China and Europe, against a backdrop of generally high uncertainty. This environment makes it clear that we need to step up our transformation plan. The progress we have made in recent years gives us momentum and the confidence to take the next steps now. This is why the executive board agreed on a substantial step-up and acceleration of our transformation plan. The result is the Volkswagen Group Target Picture 2030. It focuses on distinct levers. The most relevant are laid out on the chart. Reducing complexity in products, technology, and modular platforms while putting our customers at center stage.

Speaker #1: These achievements helped offset significant earnings headwinds and enabled us to regain the competitive flexibility and freedom to act that we need. At the same time, from 2025 onward, headwinds intensified further, driven by geopolitics, tariffs, and accelerated competition, particularly in China and Europe, against a backdrop of generally high uncertainty.

Speaker #2: Irgendwas stimmt nicht.

Speaker #3: Hallo? Hallo?

Christina Amann: Hello?

Speaker #1: Okay. Hallo, ja, jetzt kann ich kann ich Sie hören?

Pietro Zollino: Okay.

Christina Amann: Hello? Yes. Now it works. There was something.

Christina Amann: Hello?

Speaker #3: Hi, yes, now it works. There was something.

Pietro Zollino: Can you hear us?

Christina Amann: Yes. Now it works. There was something.

Pietro Zollino: Perfect.

Speaker #1: Perfect.

Speaker #3: Okay, I got a few questions. The first thing, Mr. Blume, you talked about, I don't know, German or English?

Christina Amann: Okay. I got a few questions. The first thing, Mr. Blume. German or English?

Speaker #1: This environment makes it clear that we need to step up our transformation plan. The progress we have made in recent years gives us momentum and the confidence to take the next steps now.

Speaker #1: I think English because, I mean, we have maybe some English-speaking guests as well.

Pietro Zollino: I think English because, I mean, we have maybe some English-speaking guests as well.

Speaker #3: Okay. You have talked about chances talking to Chinese companies producing cars in European Volkswagen plants. Do you have any details what kind of companies you're talking about, what kind of plants you're talking about?

Speaker #1: This is why the executive board agreed on a substantial step up and acceleration of our transformation plan. The result is the Volkswagen Group target picture 2030.

Pietro Zollino: Okay. You have talked about chances talking to Chinese companies producing cars in European Volkswagen plants. Do you have any details what kind of companies you're talking about? What kind of plants you're talking about? Is there anything going on already or is that rather an option for the future? Would that be your existing partners like FAW, SAIC, or XPeng, or would that be completely different companies? The second question is, have you already asked for refunds on the IEEPA tariff and others which are deemed illegal in the US now? Do you expect anything? Do you expect a negative reaction from Trump? Third question is regarding the capacity. You really say capacity numbers in Europe. You said 500,000 should go. Would that be mostly brand Volkswagen? Would that be other brands? What about Porsche?

Christina Amann: Okay. You have talked about chances talking to Chinese companies producing cars in European Volkswagen plants. Do you have any details what kind of companies you're talking about? What kind of plants you're talking about? Is there anything going on already or is that rather an option for the future? Would that be your existing partners like FAW, SAIC, or XPeng, or would that be completely different companies? The second question is, have you already asked for refunds on the IEEPA tariff and others which are deemed illegal in the US now? Do you expect anything? Do you expect a negative reaction from Trump? Third question is regarding the capacity. You really say capacity numbers in Europe. You said 500,000 should go. Would that be mostly brand Volkswagen? Would that be other brands? What about Porsche?

Speaker #1: It focuses on distinct l-levers. The most relevant are laid out on the chart. Reducing complexity, and products, technology, and modular platforms while putting our customers at center stage.

Speaker #3: Is there anything going on already? Or is that rather an option for the future? Would that be your existing partners like FAW, SAIC, or Xiaopeng, or would that be completely different companies?

Speaker #3: The second question is: Have you already asked for refunds on the EIPA tariffs and others which are deemed illegal in the US now? And do you expect anything?

Speaker #1: Aligning our production footprint to market realities. Exploiting gross priorities in the regions. Streamlining the portfolio. And improving execution through operational excellence, leadership, and lean government.

Oliver Blume: Aligning our production footprint to market realities. Exploiting growth priorities in the regions. Streamlining the portfolio and improving execution through operational excellence, leadership, and lean government. First, product portfolio. We must reduce complexity and consequently drive synergies across the group. We will achieve this by significantly cutting the number of models from current about 150 and reducing the number of variants. We will focus on these projects that make a tangible difference for our customers. Second, technology roadmap. We will streamline our technological toolbox and implement a much more focused approach with a targeted number of modular platforms, electric electronic architectures, ADAS stacks, and infotainment systems. Our tech stacks, RVT and SEER for the Western and Eastern Hemisphere, serve as a blueprint. Third, production network. We must adapt our production network to market realities.

Speaker #3: Do you expect a negative reaction from Trump? Third question is regarding the capacity utilization numbers in Europe. You said 500,000 should go. Would that be mostly brand Volkswagen?

Speaker #1: First, product portfolio. We must reduce complexity and consequently drive synergies across the group. We will achieve this by significantly cutting the number of models from current about 150 and reducing the number of variants.

Speaker #3: Would that be other brands? What about Porsche? And do you have any figures on how many jobs would need to be cut already? And on what oil price is your outlook based?

Christina Amann: Do you have any figures on how many jobs would need to be cut already? On what oil price is your outlook based and is there a risk of the outlook if the oil price is staying where it is right now? Thank you.

Speaker #1: We will focus on these projects that make it tangible difference for our customers. Second, technology roadmap. We will streamline our technology technological toolbox and implement a much more focused approach with a targeted number of modular platforms electric electronic architectures, Ada stacks, and infotainment systems.

Speaker #3: And is there a risk of the outlook if the oil price is staying where it is right now? Thank you.

Speaker #1: Yeah, Ms. Amman, good morning. Then I will take the first and the third question, and maybe Arno can answer the refunds and the oil pricing.

Oliver Blume: Christina Amann, good morning. I will take the first and the third question, and maybe Arno Antlitz can answer the refunds and the oil pricing. Chinese companies in Europe, we have clear priorities in adapting capacities. For example, in Osnabrück, we are in constructive talks with defense industry. That's a first approach because there's a big need and I think this is good also great support from Volkswagen to our interest in Germany and for the NATO to support with our knowledge of automation and the qualification of our people, first of all. We haven't kicked off any thinking about Chinese products or partners to work in Europe.

Speaker #1: Chinese companies in Europe, we have clear priorities in adapting capacities. And for example, in Osnabrück, we are in constructive talks with defense industry. That's first-first approach because there's a big need, and I think this could also be a great support from Volkswagen.

Speaker #1: Our tech stacks are VT and CR for the Western and Eastern Hemisphere, serve as a blueprint. Third, production network. We must adapt our production network to market realities.

Speaker #1: Based on a low or no growth environment, this requires realigning our global technical capacity to approximately 9 million units per year, consistently focus on customer demand in each region.

Oliver Blume: Based on a low or no growth environment, this requires realigning our global technical capacity to approximately 9 million units per year. Consistently focus on customer demand in each region. This will lower our break-even point to a level that gives us the necessary flexibility in such a dynamic environment. Fourth, regional growth. We must foster regional growth opportunities. We steer centrally but drive the business in the regions with more independence and decision-making power. North America and the Global South offer significant growth opportunities for Volkswagen Group. Fifth, operational excellence. We already bundled cross-functional responsibilities for development, procurement, production, sales, and quality at CEO level. This will allow us to increase the speed in decision-making, exploit synergies across the group, improve efficiency and quality while keeping entrepreneurship and at brand level. Sixth, portfolio management.

Speaker #1: To our interest in Germany, and for NATO to support with our knowledge of automation and the qualification of our people. First of all, we haven't kicked off any thinking about Chinese products or partners.

Speaker #1: This will lower our break-even point to a level that gives us the necessary flexibility in such a dynamic environment. Fourth, regional growth. We must foster regional growth opportunities.

Speaker #1: To work in Europe, if we would do it in our activities of adapting capacities, we would start with our own products from Hevey province, for example, products.

Speaker #1: We steer centrally but drive the business in the regions with more independence and decision-making power. North America and the Global South offer significant growth opportunities for Volkswagen Group.

Oliver Blume: If we would do it in our activities of adapting capacities, we would start with our own products from Hefei province, Volkswagen products. Second step could be Volkswagen products from our joint venture partners we are working together. That's the priorities. We haven't kicked off because at the end we need the free capacities. Now, today, the plants in Germany are saturated with product and at the end, this is part of the transformation plan we would have. In terms globally and to say once again, the steps we have taken, we come from a invested footprint of over 12 million units.

Speaker #1: The second step could be Volkswagen products from our joint venture partners. We are working together, and that's the priority. But we haven't kicked off because, at the end, we need the free capacities.

Speaker #1: Fifth, operational excellence. We already bundled cross-functional responsibilities for development, procurement, production, sales, and quality at CEO level. This will allow us to increase the speed in decision-making exploit synergies across the group, improve efficiency and quality while keeping entrepreneurship and at brand level.

Speaker #1: Today, the plants in Germany, etc., with products—and at the end, this is part of the transformation plan we would have. In terms globally, and to say once again the steps we have taken, we come from an invested footprint of over 12 million units.

Speaker #1: Sixth, portfolio management. Our ambition must be to significantly streamline our portfolio. Consistently aligned with the principles of the best owner approach. Arno will provide an update of our progress year to date.

Oliver Blume: Our ambition must be to significantly streamline our portfolio, consistently aligned with the principles of the best owner approach. Arno will provide an update of our progress year to date. Seventh, leadership and culture. We will foster an even stronger performance culture. The changes we have implemented since the Capital Markets Day in June 2023 demonstrate. Fewer hierarchy levels and effective lean management structures with clear responsibility and targeted integrated incentive system are two key drive to change. We will build on this. Eighth, group governance. Clear decision-making structures, streamlined processes, and greater accountability at all levels will make our company more effective and help us remain competitive in the long term. Today marks the start of our journey to bring the Volkswagen Group Target Picture 2030 to reality.

Oliver Blume: Then we have already reduced, EUR 1 million in China, EUR 1 million in Europe. The next, EUR 500,000 are agreed in China. Coming to a level of EUR 9 million, which I explained before in the investors call. We are working now to check where we do have the opportunities that Germany and Europe. Overall, we have the production cost per car to come to an average level of EUR 3,000, which is competitive in Europe. That's our primary goal. Then we are coming with flexible approaches to achieve this. This EUR 9 million level is not what we are expecting in the market. Our plans in the market are more ambitious in terms of sales.

Speaker #1: Seventh, leadership and culture. We will foster an even stronger performance culture. The changes we have implemented since the capital markets day in June 2023 demonstrate.

Speaker #1: Then we have already reduced 1 million in China, 1 million in Europe. The next 500,000 are agreed in China. So, coming to a level of 9 million, which I explained before in the investors' call, we are working now to check where we do have the opportunities.

Speaker #1: Fewer hierarchy levels and effective lean management structures with clear responsibility and targeted integrated incentive system. Our two key drive to change we will build on this.

Speaker #1: That's Germany and Europe. Overall, we have the production cost per car come to an average level of €3,000, which is competitive in Europe.

Speaker #1: And eighth, group governance. Clear decision-making structures streamline processes and greater accountability at all levels will make our company more effective and help us remain competitive in the long term.

Speaker #1: That's our primary goal. And then we are coming with flexible approaches to achieve this. And this 9 million level is not what we are expecting in the market.

Speaker #1: Today marks the start of our journey to bring the Volkswagen Group target picture 2030 to reality. The good news is, thanks to all efforts implemented already since 2023, we have a very solid basis to start from.

Oliver Blume: The good news is, thanks to all efforts implemented already since 2023, we have a very solid basis to start from. We have all the talent we need. We get strong support from our stakeholders. We have it in our own hands, and the team has the skills, will, and the spirit to excel. The strong progress achieved with our performance programs to date makes us confident that we can now take into the next level. We will drive this step in transformation decisively, and we'll deliver on our margin and cash ambitions in 2030 by implementing our transformation plan. As you have seen, it's from us since June 2023. We will take you with on the journey, on that journey through clear priorities, measurable milestones, and regular updates on our progress.

Speaker #1: Our plants in the market are more ambitious. In terms of sales, that's more to bring us into a better situation and, on the other side, bringing down our break-even level.

Oliver Blume: That's more to bring us in a better situation and on the other side, bringing down our break-even level.

Speaker #1: We have all the talent we need, we get strong support from our stakeholders, we have it in our own hands, and the team has the skills will and, will and the spirit to excel.

Speaker #1: That's the intention. And then handing over to Arno.

Pietro Zollino: It's the intention. Handing over to Arno.

Oliver Blume: It's the intention. Handing over to Arno.

Speaker #4: Yeah, the remaining two questions—very quick. In terms of refunds of tariffs, are the tariffs still in place? They are not changed, and there are some minor refund possibilities.

Arno Antlitz: The main two questions, very quick. In terms of refund of tariffs, all the tariffs are still in place. They are not changed, and there are some minor refund possibilities, for example, for parts, not vehicles. Obviously, if we have the chance to get refund, we have to fight for that. But it is more like a small EUR double-digit million in the magnitude. This compares to the EUR 4 to 5 billion headwind, just to give you an idea. In terms of oil price outlook, I talked on that already in the investor call. Our direct headwind is about EUR 20 to 30 million for fuel per month.

Speaker #1: The strong progress achieved with our performance programs to date makes us confident that we can now take into the next level. We will drive this step in transformation decisively and will deliver on our margin and cash ambitions in 2030 by implementing our transformation plan.

Speaker #4: For example, for parts, not vehicles. And obviously, if we have the chance to get a refund, we have to fight for that. But it's more like a small double-digit million in magnitude.

Speaker #1: And as you have seen, it's, from us since, June 2023, we will take you with on, on the journey on that, journey. Through clear priorities, measurable milestones, and regular updates, on our progress.

Speaker #4: And this compares to the 4 to 5 billion headwind, just to give you an idea. And in terms of oil price outlook, I talked on that already in the investor call.

Speaker #1: With that, I would like to hand over to Arno.

Oliver Blume: With that, I would like to hand over to Arno.

Speaker #4: Our direct headwind is about 20 to 30 million for fuel per month. In terms of demand, we see still a strong demand in the first quarter, both for ICE and BV vehicles.

Speaker #2: Yeah, thank you, Oliver. and well, welcome also from my side. In 2026, geopolitical tensions have risen and the competitive environment intensified even further. Against this backdrop, we made further progress.

Arno Antlitz: Thank you, Oliver. Welcome also from my side. In 2026, geopolitical tensions have risen and the competitive environment intensified even further. Against this backdrop, we made further progress. Order intake in Europe and the order book improved. Our cars are resonating well with our customers. Implementation of our In China, for China strategy continues with full speed. We reduced group-wide overhead costs by almost EUR 1 billion in a quarter, and we achieved a net cash flow of EUR 2 billion, which is quite substantial for a Q1, taking into account that we had to refill the product pipelines. Despite this progress, the operating margin, even before special effects, centered 4.3%, only reflecting the current challenges of the industry and the weak spots of our current business model.

Arno Antlitz: In terms of demand, we see still a strong demand in Q1, both for ICE and BEV vehicles. We cannot rule out that the total demand overall will be weak. There might be some headwinds depending on how long the closure of the Strait of Hormuz will continue. We prepare for a potential more headwind going on. So far, we don't see, a impact on order intake in Europe.

Speaker #4: We cannot rule out that the total demand overall will be—there might be some headwinds depending on how long the closure of the Strait of Hormuz will continue.

Speaker #2: Order intake in Europe and the order book improved, our cars are resonating well with our customers, implementation of our China for China strategy continues with full speed.

Speaker #4: So we prepare for a potential more headwind going on. But so far, we don't see an impact on order intake in Europe.

Speaker #2: We reduced group-wide overhead costs by almost $1 billion in a quarter, and we achieved a net cash flow of $2 billion euro, which is quite substantial for a first quarter taking into account that we had to refill the product pipelines.

Speaker #3: Okay, thanks, both. Frank, we believe in second chances. Frank from DVA, do you want to try again?

Pietro Zollino: Okay. Thanks both. Frank, we believe in second chances. Frank from DPA, you wanna try again?

Speaker #2: Despite this progress, the operating margin even before special effects standard 4.3% only reflecting the current challenges of the industry and the big sports of our current business model.

Speaker #2: Can we now?

Frank Schwope: Can you hear me now?

Frank Johannsen: Can you hear me now?

Pietro Zollino: Yes, perfect. Go ahead.

Speaker #1: Yes, perfect. Go ahead.

Speaker #2: Perfect. Okay. Actually, to follow up with questions to the last question from the colleague. The first one, if you want to reduce €500,000 additionally in Europe, does it mean primarily in Germany or is it not still decided?

Frank Schwope: Perfect. Okay, actually two follow-up questions to the last question from your colleague. First one, if you wanna reduce 500,000 additionally in Europe, does it mean primarily in Germany, or is it not still decided? Will that work without closure of plants in Germany or Europe, especially of course, in Germany? The second question, facing Osnabrück, the NOZ newspaper today reported that you are in advanced talks with Rafael or Dynamit Nobel, which is part of Rafael, about the production facilities in Osnabrück in the plant. The newspaper says there's already a letter of intent which was signed. Can you confirm that? Can you tell any details what's planned there? Yes. Thank you.

Frank Johannsen: Perfect. Okay, actually two follow-up questions to the last question from your colleague. First one, if you wanna reduce 500,000 additionally in Europe, does it mean primarily in Germany, or is it not still decided? Will that work without closure of plants in Germany or Europe, especially of course, in Germany? The second question, facing Osnabrück, the NOZ newspaper today reported that you are in advanced talks with Rafael or Dynamit Nobel, which is part of Rafael, about the production facilities in Osnabrück in the plant. The newspaper says there's already a letter of intent which was signed. Can you confirm that? Can you tell any details what's planned there? Yes. Thank you.

Speaker #2: Ladies and gentlemen, we bring attractive new vehicles to our customers, making technological progress and consistently delivering on our cost programs. Nevertheless, our financial figures make clear that these efforts are not yet sufficient to generate an adequate return and ensure a robust path into the future.

Arno Antlitz: Ladies and gentlemen, we bring attractive new vehicles to our customers, making technological progress and consistently delivering on our cost programs. Nevertheless, our financial figures make clear that these efforts are not yet sufficient to generate an adequate return and ensure a robust path into the future. Since we launched Volkswagen Zukunftspakt one and a half years ago, the operating environment has deteriorated significantly. US tariffs have been introduced and are weighing on our earnings by EUR 4 billion annually. Pricing and competitive pressure in China has intensified further, particularly for our premium brands, Audi and Porsche. Chinese competitors are increasingly exporting this pressure to Europe. In addition, geopolitical tension, such as the conflict in the Middle East, are worsening the global economic outlook. Against this backdrop, incremental cost measures will not be enough. We must fundamentally reshape our business model through structural, lasting improvements.

Speaker #2: And will that work without closure of plants in Germany or Europe? Especially, of course, in Germany. And the second question, facing Osnabrück, the NOZ newspaper today reported that you are in advanced talks with Rafael or Dynamit Nobel, which is part of Rafael, about the production facilities in Osnabrück and the plant.

Speaker #2: Since we launched Volkswagen Zukunft program, one and a half years ago, the operating environment has deteriorated significantly. US tariffs have been introduced and are weighing on our earnings by $4 billion annually, pricing and competitive pressure in China has intensified further, particularly for our premium brands Audi and Porsche.

Speaker #2: And the newspaper already has a letter of intent that is signed. Can you confirm that? Can you tell any details about what's planned there? Yes, thank you.

Speaker #2: And Chinese competitors are increasingly exporting this pressure to Europe. In addition, geopolitical tensions such as the conflict in the Middle East are worsening the global economic outlook.

Speaker #1: We have announced that we want to come to a feasible production footprint of 9 million cars. That’s what we have sold on average during the last five years.

Oliver Blume: We have announced that we want to come to a feasible production footprint of 9 million cars. That's what we have sold per average during the last 5 years. Our ambition in terms of sales is higher, we think to be on the safe side and improving our breakeven situation, that would be the feasible one. Talking about Osnabrück, as I mentioned already, our talks are advanced already. We do not comment the partners we are dealing with. Overall, I think we feel ourselves as an experienced company in terms of automization and with very qualified people, also in the responsibility for the goals of the German Government for the country protection.

Speaker #2: Against this backdrop, incremental cost measures will not be enough. We must fundamentally reshape our business model through structural and lasting improvements. This includes a step up in cost competitiveness of our products reduced overhead costs, improve efficiency in our plans, and higher speed both technologically-wise and in terms of decision-making.

Speaker #1: Our ambition in terms of sales is higher, but we think, to be on the safe side and improving our break-even situation, that would be the feasible one.

Arno Antlitz: This includes a step-up in cost competitiveness of our products, reduce overhead costs, improve efficiency in our plants, and higher speed, both technologically-wise and in terms of decision-making. Achieving this is not possible within our current setup. To create the conditions for long-term success, we must drastically reduce complexity in terms of size, our product portfolio, number of platforms and technology stacks we run, in terms of the number of entities and layers, and the way we steer the group. We need to put the customer at the center and structurally strengthen the core of our business. These are the priorities we will execute over the coming months. Let's now turn to the operational and financial developments of the quarter, starting with deliveries to customers.

Speaker #1: And talking about Osnabrück, as I mentioned already, our talks are advanced already. We do not comment. The partners we are dealing with. Overall, I think we feel ourselves as a experienced company in terms of automation with very qualified people.

Speaker #2: Achieving this is not possible within our current setup. To create the conditions for long-term success, we must drastically reduce complexity in terms of size or product portfolio, number of platforms, and technology stacks we run in terms of the number of entities and layers, and the way we steer the group.

Speaker #2: We need to put the customer at the center and structurally strengthen the core of our business. These are the priorities we will execute over the coming months.

Speaker #1: Also, in the responsibility for the goals of the German government for the country’s protection. And this, from our part, is also to provide—to stabilize democratization in Germany.

Oliver Blume: This from our part is also to provide to stabilize democratization in Germany. Therefore, I think it's a win-win situation at the end to adapt plant capacities and on the other side support the goals of the German government and European governments in terms of NATO.

Speaker #2: Let's now turn to the operational and financial developments of the quarter, starting with deliveries to customers. In the first three months of the year, deliveries to customers amounted to $2.05 million vehicles, some 4% below the prior year period.

Arno Antlitz: In the first 3 months of the year, deliveries to customers amounted to 2.05 million vehicles, some 4% below the prior year period. Deliveries differed by region. North America declined by 13%, mainly due to US tariffs, which became effective in April 2025. In China, deliveries to customers declined by 15%, slightly less than the overall weak market. Declines in both China and North America could be partially offset by increases in South America and Europe. South America recorded growth of 7%. In Europe, our strong momentum continued in Q1, with deliveries up 5% year-on-year. The order situation in Europe continues to be strong, thanks to the enhanced model line-up and further product momentum.

Speaker #1: Therefore, I think it's a win-win situation at the end to adapt plant capacities. And on the other side, support the goals of the German government and European governments in terms of NATO.

Speaker #2: Deliveries differed by region. North America declined by 13%, mainly due to US tariffs, which became effective in April 2025. In China, deliveries to customers declined by 15%, slightly less than the overall weak market.

Speaker #3: Okay, I hope this answers the question. Next in line would be Lazar Baković from Handelsblatt. Lazar, please. The line is yours.

Pietro Zollino: Okay. I hope this answers the question. Next in line would be Lazar Backovic from Handelsblatt. Lazar, please. Line is yours.

Speaker #2: Declines in both China and North America could be partially offset by increases in South America and Europe. South America recorded growth of 7%, and in Europe, our strong momentum continued in the first quarter with deliveries up 5% year on year.

Speaker #5: Hello and thank you, Arno. You mentioned your plant costs during the investor call and repeated here your goal is to reach 3,000 euros in Europe.

Lazar Backovic: Good morning, thank you, Arno Antlitz. You mentioned your plant costs during the investor call and repeated here your goal is to reach EUR 3,000 in Europe. You are conducting reviews at your German plants. Can you tell us where you stand in Q1 2026 and whether you met your cost target there at your key plants? That will be the first question, the second would also be on Chinese vehicles and Chinese VW models which could possibly build in Europe. I mean, technically, they are based on a different platform, on the CSP. Will this platform be localized for Europe? Can you comment on that?

Speaker #5: You are conducting reviews at your German plants. Can you tell us where you stand in the first quarter of 2026, and whether you met your cost target there at your key plants?

Speaker #2: The order situation in Europe continues to be strong thanks to the enhanced model lineup and further product momentum. In the first three months of the year, order intake increased by 3% to $1.1 million vehicles, driven by increases across all brands.

Speaker #5: That would be the first question. And the second would also be on Chinese vehicles and Chinese VW models which could possibly build in Europe.

Arno Antlitz: In the first 3 months of the year, order intake increased by 3% to 1.1 million vehicles, driven by increases across all brands. As a result, the total order book in Europe grew by 15% compared to year-end 2025 to about 1.1 million vehicles. This corresponds to an order reach of more than 3 months. Global deliveries of battery electric vehicles were down 8% year to date to 200,000 units on lower demand in China and the US. Our BEV shares stood at 10%, some 40 basis points below the prior year level. BEV deliveries in Europe saw robust demand and increased by 12%. The corresponding BEV share expanded year-on-year to 18.1%.

Speaker #2: And as a result, the total order book in Europe grew by 15% compared to year-end 2025 to about $1.1 million vehicles. This corresponds to an order reach of more than three months.

Speaker #5: I mean, technically, they are based on a different platform on the CSP, so will this platform be localized for Europe? Can you comment on that?

Speaker #2: Global deliveries of battery electric vehicles were down 8% year to date, to 200,000 units, on lower demand in China and the US. Our BV shares to that 10%, some 40 basis points below the prior year level.

Speaker #1: Yeah, Mr. Baković, we have a clear goal. We want to achieve—we made progress in a German plant by 20%, which is significant last year, but we have still a long way to go.

Arno Antlitz: Mr. Backovic, we have a clear goal that we wanna achieve. We make progress in the German plants by 20%, which is significant last year. We have still a long way to go to be cost competitive and obviously we have to pull all the levers. Productivity, and this is also why we discussed the topic of capacity, no? The Chinese are coming to Europe, building also factories which are highly efficient, and we cannot compete with underutilized plants. Improving the utilization is a key lever to make our German plants competitive, and this is why we continue to work also on improving the utilization.

Speaker #2: BV deliveries in Europe are robust demand and increased by 12%. The corresponding BV share expanded year on year to 18.1%. Skoda Elroq continued to ramp up extremely successfully with around 30,000 vehicles delivered in the first quarter, underlining strong customer demand in the fast-growing compact black battery electric vehicle segment.

Speaker #1: To be cost-competitive and obviously, we have to pull all the levers. Productivity and this is also why we discussed the topic of capacity. The Chinese are coming to Europe building also factories which are highly efficient.

Arno Antlitz: Škoda Elroq continued to ramp up extremely successfully, with around 30,000 vehicles delivered in Q1, underlining strong customer demand in the fast-growing compact battery electric vehicle segment. Let's move on to the financial and the operating performance of the Volkswagen Group in Q1. Vehicle sales came in at 2 million units, down 7% year-on-year or by 2% excluding the China JVs. Group sales revenue declined by 2% to EUR 75.7 billion. The lower vehicle sales were partially compensated by strong growth in the financial services business. Operating result came in 14% lower year-on-year at EUR 2.5 billion, corresponding to a margin of 3.3%. Our continued product offensive across all brands as well as certain customer continue to pay off in our earnings.

Speaker #1: And we cannot compete with underutilized plants. So, improving the utilization is a key lever to make our German plants competitive. And this is why we continue to work also on improving the utilization.

Speaker #2: With that, let's move on to the financial and the operating performance of the Volkswagen Group in the first quarter. Vehicle sales came in at $2 million units, down 7% year on year, or by 2% excluding the China JVs.

Speaker #5: In terms of Chinese platforms, I talked before only about options. And today, it's too early to decide if we want to localize a Chinese platform in Germany.

Oliver Blume: In terms of Chinese platforms, I talked before only about options. Today it's too early to decide if we want to localize a Chinese platform in Germany. Our priority would be, first of all, if we would do it, to take one of our own platforms first. Because this year we are ramping up the CMP platform, and the ramp up for the CSP is planned for 2027 in China. This work has to be done first, and then we could think about options in Europe. On the other side also to check which products could be the right ones.

Speaker #2: Group sales revenue declined by 2% to $75.7 billion euro, the lower vehicle sales were partially compensated by strong growth in the financial services business.

Speaker #2: Operating result came in 14% lower year on year, at $2.5 billion euro, corresponding to a margin of 3.3%. Our continued product offensive across all brands, as well as stringent cost, were continuing to pay off in our earnings.

Speaker #5: But our priority would be, first of all, when we, or if we would do it, to take one of our own platforms first. Because this year, we are ramping up the CMP platform.

Speaker #2: The results declined mainly due to special effects amounting to $800 million, or about 100 basis points margin specifically at brand Volkswagen and at Traton.

Arno Antlitz: The results declines mainly due to special effects amounting to EUR 800 million or about 100 basis points margins, specifically at Brand Volkswagen and at Traton. EUR 0.5 billion have been booked related to the announced end of the production of the ID.4 in Chattanooga. Around EUR 0.3 billion were incurred by restructuring measures at Traton as well as to a smaller extent, Brand Group Core. In addition, Traton booked an impairment related to the stop of an individual battery project. Excluding the effects, the Q1 operating margin would have amounted to 4.3% corresponding to the lower half of our full year outlook range. Cash flow in the Automotive division came in rather strong and totaled EUR 2 billion in Q1 2026 compared to EUR -800 million in the prior year quarter.

Speaker #5: And the ramp-up for the CSP is planned for 2027 in China. And this work has to be done first. And then we could think about options in Europe.

Speaker #2: 0.5 billion euro have been booked related to the announced end of the production of the ID.4 in Chattanooga, around 0.3 billion euro were incurred by restructuring measures at Traton, as well as to a smaller content to a smaller extent brand group core.

Speaker #5: And on the other side, also to check which products could be the right ones. We are getting, right now, the feedback and response from the market for our first new products in China.

Oliver Blume: We are getting right now the feedback and response from the market for our first new products in China. There are many more to come. At the end, we will decide, depending on the success we have in China, which model would fit in Europe, especially in segments where we are not present with our current portfolio in Europe. Step-by-step, but it's too early, and we haven't kicked off the process, and we haven't taken a decision.

Speaker #5: And there are many more to come. And then at the end, we will decide depending on the success we have in China which model would fit in Europe.

Speaker #2: In addition, Traton booked an impairment related to the stop of an individual battery project. Excluding the effects, the Q1 operating margin would have amounted to 4.3%, corresponding to the lower half of our full year outlook range.

Speaker #5: Especially in segments where we are not present with our current portfolio in Europe. And so step by step, but it's too early. And we haven't kicked off the a decision.

Speaker #2: Net cash flow and amount of division came in rather strong and totaled $2 billion euro in Q1 2026 compared to minus $800 million. In the prior year quarter, gross cash flow improved by 2.2 billion year on year, mainly due to the operating performance before special items and about $1.1 billion lower tax payments in the quarter.

Pietro Zollino: Quick or short follow-up, because it wasn't a question. The Q1 of 2026, you did meet your cost targets in the plants or not? Can you not comment on that?

Speaker #2: Quick or short follow-up because it wasn't the question. So the first quarter of 2026, you didn't meet your cost targets in the plants or not?

Lazar Backovic: Quick or short follow-up, because it wasn't a question. The Q1 of 2026, you did meet your cost targets in the plants or not? Can you not comment on that?

Arno Antlitz: Gross cash flow improved by EUR 2.2 billion year-on-year, mainly due to the operating performance before special items and about EUR 1.1 billion lower tax payments in the quarter. Investments in CapEx and R&D were largely unchanged, and in the absence of further M&A, we recorded a cash inflow of EUR 0.2 billion related to the sale of a stake in Sinotruk by Traton. Working capital movements at EUR -0.9 billion were a slight headwind in Q1, but on a similar level as in Q1 last year. This development clearly confirms the sustainability of working capital measures implemented in particularly in H2 of last year. Automotive net liquidity came in at EUR 34.2 billion at the end of March, almost on par with the year-end 2025 number and on a solid level.

Speaker #2: Or can you not comment on that?

Speaker #1: No, we are on track to improve. We still have a target gap from last year, and we are making progress. But it's too early to give you an indication for 2026.

Arno Antlitz: We are on track to improve. We have a still a target gap last year, and then we make progress. It's too early to give you an indication for 2026.

Speaker #2: Investments in CapEx and R&D were largely unchanged, and in the absence of further M&A, we recorded a cash inflow of 0.2 billion euro related to the sale of a stake in Sinotruck by Traton.

Pietro Zollino: Okay.

Lazar Backovic: Okay.

Oliver Blume: Being very, very clear, the progress we are doing, yeah, and personally from production, we have never seen a progress what we have seen last year. Yeah. Over 20% is massive. We haven't seen this 10 or 20 years before. There was more or less in terms of production cost, a compensation of inflation with our productivity work. This 20% is also compared to the competition, a massive progress. Being very clear on this, and we are continuing on this path, and we know how to do it.

Speaker #1: But being very, very clear, the progress we are doing—and I personally, from production—we have never seen a progress like what we have seen last year.

Speaker #2: Working capital movements at minus 0.9 billion euro were a slight headwind in the first quarter, but on a similar level as in Q1 last year.

Speaker #1: Over 20% is massive. And we haven't seen this 10 or 20 years before. There was more or less in terms of production cost, a compensation of inflation with our productivity work.

Speaker #2: This development clearly confirms the sustainability of working capital measures implemented in particularly in the second half of last year. Automotive net liquidity came in at 34.2 billion euro at the end of March, almost on par with the year-end 2025 number, and on a solid level.

Speaker #1: And this 20% is also compared to the competition, a massive progress. Being very clear on this. And we are continuing on this part. And we know how to do it.

Arno Antlitz: Net cash flow of EUR 2 billion more than compensated for the net liquidity outflow from the redemption of a hybrid bond with a nominal value of EUR 1.75 billion. Moving on to the performance of the divisions. Passenger cars recorded an operating result of EUR 0.3 billion in the first 3 months of 2026, 43% above prior year period. The margin amounted to 4.1%, up by 1.3 percentage points. Commercial vehicles saw a decline to EUR 40 million, corresponding to an operating margin of only 0.4% to a vast majority driven by special effects. The Financial Services division came in almost on par with last year's level, with an operating result of EUR 1 billion. Coming to the EBIT bridge, volume price mix had a slightly negative impact of EUR 0.2 billion.

Speaker #2: Net cash flow of $2 billion, more than compensated for the net liquidity outflow from the redemption of a hybrid bond with a nominal value of 1.75 billion euro.

Pietro Zollino: Thank you, Oliver.

Lazar Backovic: Thank you, Oliver.

Oliver Blume: Okay. Very well.

Pietro Zollino: Okay. Very well.

Speaker #1: Okay, very well.

Speaker #2: Thanks, Lazar. So I can see Bloomberg is next in line. Monica, good to have you on the call. Can you please take the mic?

Pietro Zollino: Thanks, Lazar. I can see Bloomberg is next in line. Monica, good to have you on the call. Can you please take the mic?

Speaker #2: Moving on to the performance of the division's passenger cars recorded an operating result of 0.3 billion in the first three months of 2026, 43% above prior year period.

Speaker #4: Good morning. Can you hear me all right?

[Journalist] (Bloomberg): Good morning. Can you hear me all right?

Monica Raymunt: Good morning. Can you hear me all right?

Pietro Zollino: Very good. Yeah, very good.

Speaker #2: Very good. Yeah, very good.

Speaker #4: Wonderful. Thanks so much. I guess I would just expand on some of the questions surrounding Chinese partnerships, and how those could potentially be leveraged in European plants.

[Journalist] (Bloomberg): Wonderful. Thanks so much. I guess I would just expand on some of the questions surrounding Chinese partnerships, and how those could potentially be leveraged in European plants. Mr. Blume, have you discussed the possibility of Chinese partnerships with labor leaders? I'm wondering how they have reacted to this option. How far along would these talks be? I guess on the labor side, are there certain red lines or concrete conditions of such a partnership? My second question would focus mostly on what's happening in the Middle East. I know the fallout so far has been limited, specifically when it comes to deliveries in the region.

Monica Raymunt: Wonderful. Thanks so much. I guess I would just expand on some of the questions surrounding Chinese partnerships, and how those could potentially be leveraged in European plants. Mr. Blume, have you discussed the possibility of Chinese partnerships with labor leaders? I'm wondering how they have reacted to this option. How far along would these talks be? I guess on the labor side, are there certain red lines or concrete conditions of such a partnership? My second question would focus mostly on what's happening in the Middle East. I know the fallout so far has been limited, specifically when it comes to deliveries in the region.

Speaker #2: The margin amounted to 4.1%, up by 1%.3 percentage points. Commercial vehicles saw a decline to 40 million, corresponding to an operating margin of only 0.4%, to a vast majority driven by special effects.

Speaker #4: Mr. Blume, have you discussed the possibility of Chinese partnerships with labor leaders? And I'm wondering how they have reacted to this option. How far along would these talks be?

Speaker #2: The financial services division came in almost on par with last year's level, with an operating result of $1 billion euro. Coming to the EBIT bridge, volume price mix had a slightly negative impact of 0.2 billion, positive pricing partially compensated for negative mix effects, change rate movements posted tailwind of 0.4 billion, broader costs were largely flat year on year, and last but not least, fixed costs and others had a positive effect of 0.8 billion, with overhead costs reduction being the biggest contributor.

Speaker #4: And I guess on the labor side, are there certain red lines or concrete conditions for such a partnership? And then my second question would focus mostly on what's happening in the Middle East.

Arno Antlitz: Positive pricing partially compensated for negative mix effects. Same trade movement posed a tailwind of EUR 0.4 billion. Product costs were largely flat year-on-year. Last but not least, fixed costs and others had a positive effect of EUR +0.8 billion, with overhead cost re-reduction being the biggest contributor. This is also visible when taking a more detailed look at the overhead cost development. In Q1 of the year, overhead costs in the Automotive Division have been reduced by EUR 0.9 billion. Accordingly, the overhead cost ratio improved by 70 basis points, which is quite significant. This overhead cost reduction was largely driven by the consequent implementation of restructuring measures. In Q1 2026, Volkswagen AG reduced the number of active employees, both in the indirect and direct area at its German sites by another round 1,000.

Speaker #4: I know the fallout so far has been limited, specifically when it comes to deliveries in the region. But we know that the conflict has raised energy and shipping costs in the short term.

[Journalist] (Bloomberg): We know that the conflict has raised energy and shipping costs in the short term, and General Motors was already saying that it's seeing higher costs across the board from aluminum and steel.

Monica Raymunt: We know that the conflict has raised energy and shipping costs in the short term, and General Motors was already saying that it's seeing higher costs across the board from aluminum and steel.

Speaker #4: And GM was already saying that it's seeing higher costs across the board. From aluminum and steel to.

Speaker #2: This is also visible when taking a more detailed look at the overhead cost development in the first three months of the year. Overhead costs in the automotive division have been reduced by 0.9 billion euro.

Oliver Blume: Okay. Did you finish your question? Hello? Can you hear me?

Speaker #1: Okay. Did you finish your question? Hello? Can you hear me?

Oliver Blume: Okay. Did you finish your question? Hello? Can you hear me?

Speaker #2: According to the overhead cost ratio improved by 70 basis points, which is quite significant. This overhead cost reduction was largely driven by the consequent implementation of restructuring measures.

Speaker #2: I think she has disconnected. So maybe we'll wait a couple of seconds and then we maybe start answering the part that we got.

Pietro Zollino: I think she has disconnected. maybe we wait a couple of seconds, we maybe start answering.

Oliver Blume: Yeah

Speaker #2: In the first three months of 2026, Volkswagen AG reduced the number of active employees both in the indirect and direct area at its German sites by another around 1,000.

Pietro Zollino: ... the part that we got.

Speaker #1: Can we get a signal if you're able to hear us?

Oliver Blume: Can we get a signal if you're able to hear us?

Speaker #2: Overall, since the end of 2023, headcount was reduced by approximately 15,000. In addition, Audi, Porsche, and Carriot are pushing ahead with their respective programs.

Arno Antlitz: Overall, since the end of 2023, headcount was reduced by approximately 15,000. In addition, Audi, Porsche, and CARIAD are pushing ahead with their respective programs. As a result, headcount in Germany on group level have been reduced by a total of 3,000 in the first 3 months or 18,000 in a bit more than 2 years' time. Group-wide restructuring resulted in a reduction of 29,000 headcount since 2023. Let's now turn to the development of the brand groups, platforms, and the financial services business. Within the passenger car segment, Brand Group Core recorded sales revenue almost on par with last year's Q1.

Speaker #2: I think you have Monica. I think you would have to reconnect. Yeah, then I think we take the next call and then give her a chance to when she's back on the call to get an answer.

Pietro Zollino: I think you have, Monica, I think you would have to reconnect. I think we take the next call and then give her a chance to, when she's back on the call.

Speaker #2: As a result, headcount in Germany on group level has been reduced by a total of 3,000 in the first three months or 18,000 in a bit more than two years' time.

Speaker #2: And group-wide restructuring resulted in a reduction of 29,000 headcount since 2023. Let's now turn to the development of the brand group's platforms and the financial services business.

Oliver Blume: Yep.

Pietro Zollino: To get an answer. The next one would be Sebastian Ash from Financial Times. Sebastian, please.

Speaker #2: So the next one would be Sebastian Ash from Financial Times. Sebastian, please.

Sebastian Ash: Hi there. Hope you can hear me. I actually would have liked to follow on from Monica's questions, but I mean, I would ask the same thing when it comes to the Middle East, when it comes to potential for, you know, rising material costs in particular. I mean, what have you seen in Q1, and how do you expect that to develop over the course of the year? I mean, is there any potential that we can see this have an impact on the price of vehicles at the end?

Speaker #5: Hi there. I hope you can hear me. I actually would have liked to follow on from Monica's questions. But I mean, I would ask the same thing when it comes to the Middle East, when it comes to potential for rising material costs in particular.

Sebastien Ash: Hi there. Hope you can hear me. I actually would have liked to follow on from Monica's questions, but I mean, I would ask the same thing when it comes to the Middle East, when it comes to potential for, you know, rising material costs in particular. I mean, what have you seen in Q1, and how do you expect that to develop over the course of the year? I mean, is there any potential that we can see this have an impact on the price of vehicles at the end?

Speaker #2: Within the passenger car segment, brand group core recorded sales revenue almost on par with last year's Q1, operating result came in at 0.5 billion euro, 1.5 billion euro, 38% higher than in the prior year period.

Arno Antlitz: Operating result came in at EUR 0.5 billion, EUR 1.5 billion, 38% higher than in the prior year period, despite a significant effect related to the end of the ID.4 production in the US of EUR 0.5 billion. The margin stands at 4.4%, and I will provide some more detail on Brand Group Core in a minute. Brand Group Progressive saw sales decline by 6%, while sales revenue were flat. EBIT increased by 10% to EUR 0.6 billion compared to a prior year quarter that has been impacted by costs related to US emissions regulation and restructuring charges. Porsche Automotive Business delivered an operating result of EUR 0.5 billion, corresponding to a margin of 7%.

Speaker #5: I mean, what have you seen in the first quarter? And how do you expect that to develop over the course of the year? I mean, is there any impact on the price of vehicles at the end?

Speaker #2: Despite the significant effect related to the end of the ID.4 production in the US of 0.5 billion euro, the margin stands at 4.4%, and I will provide some more detail on brand group core in a minute.

Speaker #5: And then I think the other element that I would touch on in terms of plant utilization and talks with Chinese companies, or producing your own Chinese vehicles in European factories, is that we heard again in the investor call that you're a supporter of local content rules, the Industrial Accelerator Act.

Sebastian Ash: I think the other element that I would touch on in terms of plant utilization and talks with Chinese companies or producing your own Chinese vehicles in European factories is that, you know, we heard again in the investor call that you're a supporter of local content rules, the Industrial Accelerator Act. How would that work together with Chinese production in your factories? Do you see that as complementary, or is there any friction between those two positions? Thank you.

Sebastien Ash: I think the other element that I would touch on in terms of plant utilization and talks with Chinese companies or producing your own Chinese vehicles in European factories is that, you know, we heard again in the investor call that you're a supporter of local content rules, the Industrial Accelerator Act. How would that work together with Chinese production in your factories? Do you see that as complementary, or is there any friction between those two positions? Thank you.

Speaker #2: Brand group progressive saw sales decline by 6%, while sales revenue were flat. EBIT euro, compared to a prior year quarter that has been impacted by costs related to US emissions regulation and restructuring charges.

Speaker #5: How would that work together with Chinese production in your factories? Do you see that as complementary? Or is there any friction between those two positions?

Speaker #2: Porsche Automotive business delivered an operating result of 0.5 billion, corresponding to a margin of 7%. This was driven by a significant improvement in mix from higher volumes of 911, offsetting volume headwinds in China and the US.

Arno Antlitz: This was driven by a significant improvement in mix from higher volumes of 911, offsetting volume headwinds in China and the US. Let's have a look at the brands of the Brand Group Core. The operating result was largely driven by Škoda and the component business. Volkswagen passenger cars recorded a decline in profitability by 20 basis points to 0.4%, mainly due to the costs related to the ID.4 production stop in the US, as well as significant headwinds from US tariffs. Škoda continued their impressive earnings trajectory and improved operating margin by 80 basis points to a remarkable value of 8.3%. Excluding the non-operational effect, the financial performance of Volkswagen brand and Brand Group Core are decent. Before effects of EUR 0.5 billion from the ID.4 production stop at Chattanooga, Volkswagen reported a margin of 3.3%.

Speaker #5: Thank you.

Speaker #2: Let's have a look at the brands of the brand group core. The operative result was largely driven by Škoda and the component business. Volkswagen passenger cars recorded a decline in profitability by 20 basis points to 0.4%, mainly due to the costs related to the ID.4 production stop in the US, as well as significant headwinds from US tariffs.

Speaker #1: Yeah, may I start? And Monica also touched this question. And I hope she's connected again. To be very clear, today, we haven't got a concrete plan to share capacities with a Chinese partner.

Oliver Blume: May I start? Monica also touched this question, and I hope she's connected again. To be very clear, today we haven't got a concrete plan to share capacities with a Chinese partner, and there are no activities. We are talking about only options, and these options are with clear priorities. The first priority would be to think about a own Volkswagen product we have designed, engineered, and we are producing in China to make a localization here in Europe. First of all, we have to ramp up the new product in China. If you have mentioned, the huge momentum we are bringing now to the market has to be executed.

Speaker #1: And there are no activities. We are talking about only options. And these options are with clear priorities. And the first priority would be to think about a own Volkswagen product we have designed engineered and we are producing in China.

Speaker #2: Škoda continued their impressive earnings trajectory and improved operating margin by 80 basis points to a remarkable value of 8.3%. Excluding the non-operational effect, the financial performance of Volkswagen brand and brand group core are decent.

Speaker #2: Before effects of 0.5 billion euro from the ID.4 production stop at Chattanooga, Volkswagen reported a margin of 3.3%. This is slightly below the margin target of 4% that the brand has set itself for the full year 2026.

Speaker #1: To make a localization here in Europe. But first of all, we have to ramp up the new products in China. And if you have mentioned the huge momentum we are bringing now to the market, it has to be executed.

Arno Antlitz: This is slightly below the margin target of 4% that the brand has set itself for the full year 2026. A reminder that we must continue to rigorously implement the measures agreed at our Volkswagen Zukunftspakt and intensify speed and magnitude of the restructuring programs. Backed by increasing volumes, CARIAD recorded sales revenue of EUR 0.4 billion, up 64% year-on-year. Operating loss was reduced to -EUR 0.4 billion, benefiting from the implementation of restructuring measures and higher volumes. PowerCo kept operating results at a stable level despite the ongoing ramp-up of cell production at the Salzgitter plant and intensifying construction works at the Valenciennes St. Thomas plant. Traton recorded a slow start to the year, driven by lower unit sales, in particular in South America and North America. Sales in Europe were up and order trends in the region remain promising.

Speaker #2: And a reminder that we must continue to rigorously implement the measures agreed under Volkswagen Zukunft, agreement, and intensify speed and magnitude of the restructuring programs.

Speaker #1: And for this year and the next year, we have a lot of work to bring all this to life. We are talking about 20 new models this year.

Oliver Blume: For this year and the next year, we have a lot of work to bring all this to life. We are talking about 20 new models this year and overall 30 new models by the end of 2027. Step by step and being very clear on this, no activities right now to partner in Europe in terms of capacities. We will do it for the next steps. In terms when we have decided where we want to reduce capacities, then we are thinking about the options we do have. There, Defense could be a part, but also own products from China. Step after step.

Speaker #2: Backed by increasing volumes, Carriot recorded sales revenue of 0.4 billion, up 64% year on year. Operating loss was reduced to minus 0.4 billion euro, benefiting from the implementation of restructuring measures and higher volumes.

Speaker #1: And overall, 30 new models by the end of 2027. And so step by step and being very clear on this, no activities right now to partner in Europe in terms of capacities.

Speaker #2: PowerCo kept operating results on a stable level despite the ongoing ramp-up of cell production at the Salzgitter plant and intensifying construction works at the Valencia and St.

Speaker #1: We will do it for the next steps. In terms of when we have decided where we want to reduce capacities, then we are thinking about the options we do have.

Speaker #2: Thomas plant. Traden recorded a slow start to the year, driven by lower unit sales, in particular in South America and North America. Sales in Europe were up, and order trends in the region remain promising, mainly as a result of lower volumes, sales revenue declined by 5% to 9.8 billion euro, operating result came in at 40 million euro, significantly below the prior year quarter.

Speaker #1: And there, defense could be a part, but also own products from China. But step by step after step, but the positive way of thinking is that now we, as a global player, have the opportunities to benefit from what we are doing in China.

Oliver Blume: But the positive way of thinking is that now we as a global player have the opportunities to benefit what we are doing in China in terms of innovation, in terms of processes, and at the end, also in terms of products, we could have the opportunity not only for the Global South, which is our first priority from China to Asia-Pacific, Middle East, India, South America, and Africa. Europe is a maybe step for the upcoming years, but not decided.

Arno Antlitz: Mainly as a result of lower volume, sales revenue declined by 5% to EUR 9.8 billion. Operating result came in at EUR 40 million, significantly below the prior year quarter. Lower volumes, US tariff costs, foreign currency effects, and special effects mainly related to the adjustment to the electric mobility projects, the sale of Springfield site, and the EU truck case negatively impacted results. Our financial services business delivered a solid performance in the period under review, supported by improved contract volume, specifically in Europe. The credit loss ratio continues to be on a solid level. Operating result at EUR 1 billion was almost on par with the prior year level. Investment spend for CapEx and R&D in the automotive division was slightly lower in the quarter by EUR 0.2 billion to EUR 7.5 billion in Q1.

Speaker #1: In terms of innovation, in terms of processes, and at the end, also in terms of products we could have the opportunity not only for the Global South, which is our first priority from China, to Asia Pacific, Middle East, India, South America, and Africa.

Speaker #2: Lower volumes, US tariff costs, foreign currency effects, and special effects mainly related to the adjustment to the electric mobility projects, the sale of Springfield site, and the EU truck case negatively impacted results.

Speaker #1: And Europe is a maybe step for the upcoming years, but not decided.

Speaker #2: Our financial services business delivered a solid performance in the period under revenue supported by improved contract volume, specifically in Europe. The credit loss ratio continues to be on a solid level, operating result at 1 billion euro was almost on par with the prior year level.

Speaker #5: Yeah, and since it's a lot of interest there, we'll give a little bit more details on Middle East, first and foremost, direct effect. On our cost, for example, shipping and transport, it's about 20 to 30 million burden a month.

Arno Antlitz: Yeah. Since it's a lot of interest there, we'll give a little bit more details on Middle East. First and foremost, direct effect on our cost, for example, shipping and transport, it's about EUR 20 to 30 million burden a month. This is what we currently see due to the higher cost of fuel. On raw material costs and others, we have quite some good hedging in 2026. There we expect a lower burden, but obviously hedging, it doesn't last forever. We expect there some rising costs. We don't see so far second-round effects, but obviously we cannot rule out that some of the materials we buy, some of our materials, our suppliers buy plastics, chemicals, others become more expensive.

Speaker #5: This is what we currently see due to the higher cost of fuel. On raw material costs and others, we have quite some good hedging in 2026.

Speaker #2: Investment spend for CapEx and R&D in the automotive division was slightly lower in the quarter by 0.2 billion euro to 7.5 billion in the first three months of the year.

Speaker #2: The invest ratio stood at 11.3%, largely unchanged year over year. We remain fully committed to sustainably reducing investment spend in the years to come.

Speaker #5: So there we expect a hedging doesn't last forever. So we expect there some rising costs. We don't see so far a second round effect.

Arno Antlitz: The invest ratio stood at 11.3%, largely unchanged year-over-year. We remain fully committed to sustainably reducing investment spend in the years to come. Moving on to the performance of our China joint ventures. In an overall weak market and continued high competitive pressure, specifically in premium, unit sales were 90% lower year-on-year at 0.5 million vehicles. At the same time, Volkswagen Group China is launching its unprecedented model offensive, which is burdening results now, and we expect contributions from Q3 onwards. As a result, and as expected, the proportionate operating result of our joint ventures in China came in at EUR 83 million in Q1 2026. We confirm the bandwidth for proportionate operative result for the full year and continue to expect an operational and financial turnaround in fiscal year 2027.

Speaker #2: Moving on to the performance of our China joint ventures, in an overall weak market and continued high competitive pressure, specifically in premium unit sales were 90% lower year on year, at 0.5 million vehicles, at the same time Volkswagen Group China is launching its unprecedented model offensive, which is burdening results now, and we expect contributions from Q3 onwards.

Speaker #5: But obviously, we cannot rule out that some of the materials we buy, some of our materials our suppliers buy plastics, chemicals, others, become more expensive.

Speaker #5: In terms of demand, we have about 50 to 100,000 sales in the region. Obviously, there's a risk. It's less than 1%, but it's nevertheless important for our premium brands.

Arno Antlitz: In terms of demand, we have about 50,000 to 100,000 sales in the region. Obviously, there's a risk. It's less than 1%, but it's nevertheless important for our premium brands and, yeah, demand overall, as said, we cannot rule out there's a headwind. The overall market in the first 3, 6, 3 months is down about 4%, total market, mainly due to China. We cannot rule out that the outlook of the year will worsen if the conflict and the closure of the Hormuz stays. This is what we prepare for on the cost side. We have to prepare for these kind of disruptions and make Volkswagen more robust.

Speaker #2: As a result, and as expected, the proportion of operating result of our joint ventures in China came in at 83 million euro in the first quarter of 2026.

Speaker #5: And demand overall, as said, we cannot rule out there's a headwind. The overall market in the first three months is down about 4%—total market—mainly due to China.

Speaker #2: We confirm the bandwidth for proportional operative result for the full year and continue to expect an operational and financial turnaround in fiscal year 2027.

Speaker #5: And we cannot rule out that the outlook for the year will worsen if the conflict and the closure of the Hormuz Strait escalate. And this is what we prepare for on the cost side.

Speaker #2: This brings me to the full year outlook, which we confirmed today. Continue to expect the operating return on sales in a bandwidth between 4 and 5.5%, building on the strong start to the year.

Arno Antlitz: This brings me to the full-year outlook, which we confirm today. Continue to expect the operating return on sales in a bandwidth between 4% and 5.5%. Building on the strong start to the year, we continue to expect automotive net cash flow to the range between EUR 3 and 6 billion. Ladies and gentlemen, six strategic fields will determine the success of our strategy. The ramp-up of electric vehicles, software, China and North America, robust operating margins in a low-growth environment, capital efficiency and cash conversion, and a lean governance and reduced complexity. For most of these action fields, we have developed comprehensive plans that now must be implemented consistently and with strict discipline. At the same time, the economic environment has changed significantly.

Speaker #5: We have to prepare for this kind of disruptions and make Volkswagen more robust.

Speaker #2: We continue to expect automotive net cash flow to the range between 3 and 6 billion. Ladies and gentlemen, six strategic fields will determine the success of our strategy: the ramp-up of electric vehicles, software, China and North America, robust operating margins in a low-growth environment, capital efficiency, and cash conversion, and the lean governance and reduced complexity.

Speaker #2: Okay, thank you very much. I can see Monica, you're back on the call. I believe you first question has been answered about Chinese partnerships.

Pietro Zollino: Okay. Thank you very much. I can see, Monika, you're back on the call. I believe your first question has been answered about Chinese partnerships.

Speaker #2: The second one we didn't. Unfortunately, you broke up. You want to start with the second one?

[Journalist] (Bloomberg): Yes, it has.

Monica Raymunt: Yes, it has.

Pietro Zollino: get, unfortunately, you broke up. You want to start with the second one?

[Journalist] (Bloomberg): No, I think it's been tackled already by my colleague. I just wanted to raise my hand to say I'm back, and I appreciate you waiting and then answering the question.

Speaker #6: No, I think it's been tackled already. By my colleague, I just wanted to raise my hand to say I'm back and I appreciate you waiting and then answering the question.

Monica Raymunt: No, I think it's been tackled already by my colleague. I just wanted to raise my hand to say I'm back, and I appreciate you waiting and then answering the question.

Speaker #2: For most of this action fields, we have developed comprehensive plans that now must be implemented consistently and with strict discipline. At the same time, the economic environment has changed significantly.

Speaker #2: Okay, no problem. Good. Then I would say next one could be Christian Müskens from FAZ. Christian, can you hear us?

Pietro Zollino: Okay. No problem. Good. Then I would say, next one could be, Christian Mückens from FAZ. Christian, can you hear us?

Speaker #2: Since the launch of the Volkswagen Zukunft program, which has was designed to achieve a sustainable margin for Volkswagen brand, the world has changed dramatically.

Arno Antlitz: Since the launch of the Volkswagen Zukunftspakt, which was designed to achieve a sustainable margin for Volkswagen brand, the world has changed dramatically. In this environment, it's not enough to just incrementally increase cost measures. We need to fundamentally change our business model with a step-up of structural and lasting improvement in terms of cost competitiveness of our products, in terms of overhead cost reduction and efficiency improvements in our plants, and in terms of speed. To be able to achieve this, we must significantly reduce complexity of our business model. These are the priorities we will address with determination over the coming months. Thank you very much. With that, I hand back to Rolf.

Speaker #7: Hello?

Christian Mückens: Hello? Hello.

Christian Müßgens: Hello? Hello.

Speaker #2: In this environment, it's not enough to just incrementally increase cost measures. We need to fundamentally change our business model. We have a step-up of structural and lasting improvements.

Speaker #2: Yeah. Hello. Please go ahead.

Pietro Zollino: Yeah. Hello. Please go ahead.

Christian Mückens: Uh,

Christian Müßgens: Uh,

Speaker #7: Entschuldigung, meine Fragen wurden beantwortet. Ich hätte mich sonst gemeldet. Vielen Dank.

Pietro Zollino: Okay. I saw you on the list. Good.

Speaker #2: Okay, okay, okay. Because I saw you on the list. Good. Then, okay, that's fine. That's a good sign if we've answered all the questions already.

Pietro Zollino: Okay. I saw you on the list. Good.

Speaker #2: In terms of cost competitiveness of our products, in terms of overhead cost reduction, and efficiency improvements in our plants, and in terms of speed.

Christian Mückens: Okay.

Christian Müßgens: Okay.

Pietro Zollino: Okay. That's fine. That's a good sign if we answered all the questions already. Seems to be the right ones. The next in line would be Lutz Meyer from Capital.

Speaker #2: Seems to be the right ones. Then the next in line would be Lutz Meyer from Kapital.

Speaker #2: To be able to achieve this, we must significantly reduce complexity of our business model. These are the priorities we will address with determination over the coming months.

Lutz Meyer: Hello? Hello.

Lutz Meier: Hello? Hello.

Speaker #8: Hello. Hello.

Pietro Zollino: Hello.

Speaker #2: Hello. Go ahead, please.

Lutz Meyer: Hello.

Lutz Meier: Hello.

Speaker #8: Hello. Thank you for taking my question. I'm referring to something Arno Antlitz mentioned earlier in the analyst's call. He said that you are calculated with the burden of 400 to 500 million for CO2 costs in Europe.

Pietro Zollino: Hello.

Lutz Meyer: Hello.

Lutz Meier: Hello.

Pietro Zollino: Go ahead, please.

Lutz Meyer: Thank you for taking my question. I'm referring to something Arno Antlitz mentioned earlier in the analyst call. He said that you are calculated with the burden of EUR 400 to 500 million for CO2 costs in Europe, and you have to calculate against the margin dilution of the model. First of all, I'd like to know the EUR 400 to 500 million, is that per year in this three-year period which is running currently? The second is, maybe you can elaborate a bit how you calculate the trade-off. To which amount of BEV models you have to sell to lower this potential burden? How are you dealing actually with, and maybe also to what extent still the BEV margins are below the ICE margins?

Lutz Meier: Thank you for taking my question. I'm referring to something Arno Antlitz mentioned earlier in the analyst call. He said that you are calculated with the burden of EUR 400 to 500 million for CO2 costs in Europe, and you have to calculate against the margin dilution of the model. First of all, I'd like to know the EUR 400 to 500 million, is that per year in this three-year period which is running currently? The second is, maybe you can elaborate a bit how you calculate the trade-off. To which amount of BEV models you have to sell to lower this potential burden? How are you dealing actually with, and maybe also to what extent still the BEV margins are below the ICE margins?

Speaker #2: Thank you very much, and with that, I hand back to Rolf. Thank you, Ollie. Thank you, Arno. For the concise presentation. Before we move to the Q&A, let me give you some instructions.

Rolf Woller: Thank you, Oli. Thank you, Arno, for the concise presentation. Before we move to the Q&A, let me give you some instructions. You should be dialed in into the conference call in order to raise a question. Will not work if you're dialed in via webcast. If you want to raise a question, you must press star 1, and after that, another 1. To withdraw the question, you do the same procedure. Let me briefly highlight the next events where you can follow us. We will continue on 10 June with our ESG conference. There will be the annual shareholders meeting on 18 June, and then the H1 call on 24 July.

Speaker #2: You should be dialed in into the conference call in order to raise a question. It will not work if you're dialed in via webcast.

Speaker #8: And you have to calculate against the margin dilution of the model. So first of all, I'd like to know the 400 to 500 millions, is that per year in this three-year period, which is running currently?

Speaker #2: If you want to raise a question, you must press star one, and after that, another one. And to withdraw the question, you do the same procedure.

Speaker #2: Let me briefly highlight the next events where you can follow us. We will continue on June 10th with our ESG conference. There will be the annual shareholders' meeting on June 18th, and then the H1 call on July 24th.

Speaker #8: And the second is, maybe you can elaborate a bit on how you calculate the trade-off. So, to which amount of BEV models do you have to sell to lower this potential burden?

Speaker #2: And with that, I would like to move on to the Q&A session. And see here, the first question coming from Tim Rokossa from Deutsche Bank.

Rolf Woller: With that, I would like to move on to the Q&A session and see here the first question coming from Tim Rokossa from Deutsche Bank. Tim, please go ahead with your question.

Speaker #8: And how are you dealing, actually, with—and maybe also, to what extent still—the BEV margins being below the ICE margins? Because Arno Antlitz mentioned they are pretty much higher now, but it's still not the same level, if I got it right.

Speaker #2: Tim, please go ahead with your question.

Lutz Meyer: Arno Antlitz just mentioned, they are pretty much higher now, but it's still not the same level, if I categorize. Thank you very much.

Lutz Meier: Arno Antlitz just mentioned, they are pretty much higher now, but it's still not the same level, if I categorize. Thank you very much.

Speaker #3: The target program, very interesting to see that much needed with the Chinese OEM coming to Europe, tariffs, ETC, and it's also good to learn about here first and not the media.

Tim Rokossa: Target program. Very interesting to see that much needed with the Chinese OEM coming to Europe, tariff CTC. It's also good to learn about here first and not the media. Obviously, we want to know what all of this will cost you. We want to know what it brings you, and I suspect you're not yet ready to say that. Let me ask in a different way. Do you expect a material net EBIT improvement from this program, from the levels that you are at right now, or it's just barely enough to counter the headwinds that we're seeing in the market? Given it says, again, reduce the number of variants, and I've heard this many, many times over the 18 years I cover you guys now from VW. Can you give examples for how much you see on that side being possible?

Speaker #8: Thank you very much.

Speaker #5: Yeah, to be a little bit more precise on that, we expect that a miss of the CO2 targets also on the three-year period, '25, '26, '27—one reason is we expect really a very positive feedback and ramp-up of the ID.2 family.

Oliver Blume: To be a little bit more precise on that, we expect that a miss of the CO2 targets also on the three-year period, 2025, 2026, 2027. One reason is we expect a really a very positive feedback and ramp-up of the ID.2 family. Then later on, ID.1, also very promising car, but they come late 2026 and 2027. We expect a miss of EUR 400 to 500 million CO2 costs per year. Basically almost EUR 1.5 billion over the three-year period. The obvious question for you is, why don't you just sell more electric cars?

Arno Antlitz: To be a little bit more precise on that, we expect that a miss of the CO2 targets also on the three-year period, 2025, 2026, 2027. One reason is we expect a really a very positive feedback and ramp-up of the ID.2 family. Then later on, ID.1, also very promising car, but they come late 2026 and 2027. We expect a miss of EUR 400 to 500 million CO2 costs per year. Basically almost EUR 1.5 billion over the three-year period. The obvious question for you is, why don't you just sell more electric cars?

Speaker #3: Now, obviously, we want to know what all of this will cost you. We want to know what it brings you. And I suspect you're not yet ready to say that.

Speaker #3: So let me ask in a different way. Do you expect improvement from this program, from the levels that you are at right now, or is it just nearly enough to counter the headwinds that we're seeing in the market?

Speaker #3: And given it says again, reduced the number of variants, and I've heard this many, many times over the 18 years I cover you guys now from VW, can you give examples for how much you see on that side being possible?

Speaker #5: And then later on, ID1 also very promising car, but they come late 26 and 27. So we expect a miss of 300 to 400 to 500 million CO2 costs per year.

Speaker #3: And on the capacity side, is it fair to assume that most of this comes out of Europe? And secondly, Arno, for you, just thinking about seasonality of cash and earnings here, free cash flow is obviously quite strong.

Tim Rokossa: On the capacity side, is it fair to assume that most of this comes out of Europe? Secondly, Arno, for you, just thinking about seasonality of cash and earnings here. Free cash flow is obviously quite strong. It's helped by taxes, but also the underlying number is quite strong. Two questions. Should we expect normal seasonality in Q2 from what you can tell right now? i.e., that it should be stronger underlying on earnings and help to cash the Q1. Since you didn't upgrade your free cash flow target now, is that just a sign of what's going on in the world with all the uncertainty, or is there any cash outs that you already foresee today that prevent you from actually printing possibly a higher than previously guided for figure? Thank you.

Speaker #5: So basically, almost $1.5 billion over the three-year period. And so the obvious question for you is, why don't you just sell more electric cars?

Speaker #3: It's helped by taxes, but also the underlying number is quite strong. So two questions. Should we expect normal seasonality in Q2 from what you can tell right now, i.e., that it should be stronger underlying on earnings and also cash than Q1?

Oliver Blume: We must really expect the fact that we have to sell more the cars, more electric cars than the natural demand in Europe is. We have to help these cars with prices that put us into a situation that the margin is much lower than in combustion engine cars. We make a trade-off between money we lose due to the CO2 fine and money we lose to the margin loss of the BEVs. This is our responsibility, and this is currently where we stand. The obvious solution is improve the margin of the BEVs. This is what we heavily work on. The first generation, like the ID.3, they have really a very weak margin. Next generation, we call it MEB Plus, has a much better margin, contribution margin.

Speaker #5: We must really accept the fact that we have to sell more of the cars, more electric cars, than the natural demand in Europe.

Arno Antlitz: We must really expect the fact that we have to sell more the cars, more electric cars than the natural demand in Europe is. We have to help these cars with prices that put us into a situation that the margin is much lower than in combustion engine cars. We make a trade-off between money we lose due to the CO2 fine and money we lose to the margin loss of the BEVs. This is our responsibility, and this is currently where we stand. The obvious solution is improve the margin of the BEVs. This is what we heavily work on. The first generation, like the ID.3, they have really a very weak margin. Next generation, we call it MEB Plus, has a much better margin, contribution margin.

Speaker #3: And since you didn't upgrade your free cash flow target, now, is that just a sign of what's going on in the world with all the uncertainty, or is there any cash outs that you're already foresee today that prevent you from actually printing possibly a higher than previously guided for figure?

Speaker #5: So we have to help these cars with prices that put us into a situation that the margin is much lower than in combustion engine cars.

Speaker #5: So we make a trade-off between money we lose due to the CO2 fine and money we lose due to the margin loss of the BVs.

Speaker #3: Thank you.

Speaker #4: Yeah, Tim, good morning. And let me start with your first question in terms of improvement, in terms of EBIT. As Arno mentioned, we will keep our expectation yet to year on a profit margin between 4 and 5.5%.

Oliver Blume: Yeah, Tim, good morning. Let me start with your first question in terms of improvement in terms of EBIT. As Arno mentioned, we will keep our expectation year to year on a profit margin between 4% and 5.5%. With this, we expect a net EBIT improvement. All this despite of all the headwinds we are faced geopolitically, the regulations, the market, and the expenditures and transformation. This we are able because of all the work we have done during the last years. Year to year, we expect a better EBIT.

Speaker #5: This is our responsibility. And this is currently where we stand. So the obvious solution is improve the margin of the BVs and this is what we heavily work on.

Speaker #5: The first generation, like the ID3, they have really a very weak margin. Next generation we call it MEB+. It has a much better margin.

Speaker #4: And with this, we expect a net EBIT improvement. And all this despite of all the headwinds. We are faced geopolitically the regulations, the market, and the expenditures and transformation.

Speaker #5: Contribution margin, they get an LFP battery that great cars were introduced so far just yesterday. We saw the ID Polo. And if you compare for example, the ID Cross, ID2 Cross, with the T-Cross, which is a combustion engine car, the margin is much, much closer.

Oliver Blume: Now they get an LFP battery. The great cars were introduced so far. Just yesterday, we saw the ID.Polo. If you compare, for example, the ID.Crozz, ID.2 Crozz with the T-Cross, which is a combustion engine car, the margin is much closer, 70% to 80% already, but still not on the same level. We expect the margin, the fully comparable margin only with our future platform, SSP. This is why we concentrate on developing that. Until the time when this platform arrive, we have to make sound trade-offs between BEV volumes and CO2 fines.

Arno Antlitz: Now they get an LFP battery. The great cars were introduced so far. Just yesterday, we saw the ID.Polo. If you compare, for example, the ID.Crozz, ID.2 Crozz with the T-Cross, which is a combustion engine car, the margin is much closer, 70% to 80% already, but still not on the same level. We expect the margin, the fully comparable margin only with our future platform, SSP. This is why we concentrate on developing that. Until the time when this platform arrive, we have to make sound trade-offs between BEV volumes and CO2 fines.

Speaker #4: And we are able, because of all the work we have done during the last years, and so year to year, we would expect a better EBIT.

Speaker #5: Seventy to eighty percent already, but still not on the same level. We expect the margin, the fully comparable margin, only with our future platform, SSP.

Oliver Blume: In terms of models, variants, and capacities, with the program we have launched, we want to reduce our models and variants with a double-digit percentage and also the options. The idea is more to bundle offers and so making it easier at the end also for our customers and more and more transparent to order a car. In terms of capacities, we come from an extensive production footprint from over 12 million units. We already reduced 1 million in China in several plants, and some also linked to component plants. 1 million in Europe.

Speaker #4: Then in terms of models, variants, and then capacities. We with the program, we have launched we want to reduce our models and variants with a double-digit percentage and also the options.

Speaker #5: This is why we concentrate on developing that and until the time when this platform arrives, we have to make sound trade-offs between batch volumes and CO2 fines.

Speaker #4: There the idea is more to bundle offers. And so making it easier at the end also for our customers and more and more transparent to order a car.

Speaker #2: Okay, I can see one more question Rachel, you're waiting as well. Rachel from Thomson Reuters.

Pietro Zollino: Okay, I can see one more question. Rachel, you're waiting as well. Rachel from Thomson Reuters.

Speaker #6: Yes, good morning. Thanks for connecting. I wanted to ask, you said improving utilization is a key lever. Mr. Antlitz, I wanted to ask what this means for the fickle plant.

Operator: Yes. Good morning. Thanks.

Rachel More: Yes. Good morning. Thanks.

Speaker #4: In terms of capacities, we come from an invested production footprint from over 12 million units. We already reduced 1 million in China. In several plants, and also linked to component plants.

Pietro Zollino: Good morning.

Operator: I wanted to ask, you said, improving utilization is a key lever, to Arno Antlitz. I wanted to ask what this means for the Zwickau plant. Are you planning similar defense partnerships there, like in Osnabrück, or can you share any other plans for Zwickau? I wanted to ask if you can give any specifics on streamlining the product platform. Are there any models that you have that will be discontinued, any brands that will be affected in particular or synergies? Any detail there, if you can, please.

Rachel More: I wanted to ask, you said, improving utilization is a key lever, to Arno Antlitz. I wanted to ask what this means for the Zwickau plant. Are you planning similar defense partnerships there, like in Osnabrück, or can you share any other plans for Zwickau? I wanted to ask if you can give any specifics on streamlining the product platform. Are there any models that you have that will be discontinued, any brands that will be affected in particular or synergies? Any detail there, if you can, please.

Speaker #6: Are you planning similar defense partnerships there, like in Osnabrück, or can you share any other plans for Zwickau? And then I wanted to ask if you can give any specifics on streamlining the product platforms.

Speaker #4: Then 1 million in Europe. There, for example, we closed Brussels-Russia-Dresden now turning to a technology and innovation campus. Then Osnabrück is on the way.

Oliver Blume: There, for example, we closed Brussels, Russia, Dresden now, turning to a technology and innovation campus. Also Brick is on the way and in Volkswagen and Audi, we adapted technological capacity, so one plus one. We are on 10 million, and we think that 9 million will be reasonable. Percentage of the last five years has been on this level. Last week, we announced another 500,000 in China. We are aiming now for reducing capacity in Germany, Europe, with another 500,000 to come to 9 million. We will bring down our cost level to this 9 million and aiming for more profitability.

Speaker #6: So are there any models that you have that will be discontinued? Any brands that will be affected in particular or synergies? Any detail there if you can, please?

Speaker #4: And Volkswagen and Audi, we adapted technological capacities. So 1 plus 1. So we are on 10 million. And we think that 9 million will be reasonable.

Speaker #5: Yeah, Rachel. Oliver speaking. And let me start with defense. First of all, we want to close the solution for the Osnabrück plant. And this will give us a bit of a feeling how does it work up to now.

Oliver Blume: Yeah, Rachel, Oliver speaking. Let me start with defense. First of all, we want to close the solution for the Osnabrück plant. This will give us a bit of feeling how does it work. Up to now, it's very constructive with a positive perspective what we could do there. At the end, we know about the need of the defense industry, and they're being very clear. Volkswagen won't go at the end for weapons. Now, that's clear. We are providing our experience of serial production, automization, and so on, which is very useful for the defense industry. Our knowledge is more on military transport or safety systems.

Speaker #4: Percentage of the last five years has been on this level. So last week, we announced another 500,000 in China. And we are aiming now for reducing capacity in Germany, Europe, with another 500,000 to come to 9, 9 million.

Speaker #5: It's very constructive, and with a positive perspective, we can consider what we could do there. And at the end, we know about the need of the defense industry.

Speaker #4: And we will bring down our cost level to this 9, 9 million. And aiming for more profitability.

Speaker #5: And there being very clear, Volkswagen won't go at the end for weapons. That's clear. We are providing our experience of serial production automatization and so on, which is very useful for the defense industry.

Speaker #2: Yeah, Tim, thanks for the question. And I would like to add on what Oliver just said. All these measures he mentioned. Look, we Oliver laid out or we laid out our strategic margin target of 8 to 10 percent some months ago.

Arno Antlitz: Yeah, Tim, thanks for your question. I would like to add on what Oliver just said. No, all these measures he mentioned. Look, Oliver laid out or we laid out our strategic margin target of 8% to 10% some months ago. Now obviously this transformation program, which just lay out is the way in steps to achieve this margin target at the end of this decade. We now fill the gaps from where we currently trade, of where to our current margin target is, what the headwinds are, and still be able to come up to the 8% to 10%.

Speaker #5: And our knowledge is more on military transport or safety systems. Then for the next step, and there in Zwickau, we have made decisions for the upcoming years.

Speaker #2: And now obviously this transformation program we just laid out is the way in steps to achieve this market margin target at the end of this decade.

Oliver Blume: For the next step, there in Zwickau, we have made some decisions for the upcoming years with our agreement we closed at the end of 2024. We are going for recycling in Zwickau. We have done a reduction of the capacity technically, and the same for other German plants. We will enter into the next steps in terms of solution finding. Yeah. No decisions are taken, but defense is interesting, and we will have the first experience there.

Speaker #2: And we now fill the gaps from where we currently trade. Whereas our current margin target is what the headwinds are and still be able to come up to the 8 to 10 percent.

Speaker #5: With our agreement, we closed at the end of '24. And so we are going for recycling in Zwickau. We have done a reduction of the capacity technically.

Speaker #2: And in terms of cash flow, yeah, we are quite pleased with the strong cash flow in Q1, giving the seasonality of our business. Normally in Q1, we fill up the order bank.

Arno Antlitz: In terms of cash flow, we are quite pleased with the strong cash flow in Q1, giving the seasonality of our business normally in Q1, and we fill up the order bank. To be very transparent, now it's about EUR 1 billion coming from the operative business before special effects. EUR 1 billion, slightly less coming from tax payment versus last year. Last but not least, we were very disciplined on M&A, which is another EUR 1 billion. We have to take into account that there's a slight seasonality. As you know, we were successful in the winter test, where we make good progress in our JV with Rivian.

Speaker #5: And the same for other German plants. And then we will enter into the next steps in terms of solution finding. No decisions taken. But defense is interesting.

Speaker #2: But to be very transparent, it's about a billion coming from the operative business before special effects, a billion slightly less coming from tax versus tax payment versus last year.

Speaker #5: And we will have the first experience there. In terms of products, we have the clear intention to reduce the number of our products worldwide.

Oliver Blume: In terms of products, we have the clear intention to reduce the number of our products worldwide, double-digit percentage, and also to reduce the options by reducing complexity and also reducing our capital investment on this and making our structures cleaner and also providing for our customers a clearer profile with our product. We have already started this process. The products which will come to the market right now, for example, the Polo or the Cupra Raval, have already benefit from these activities, and we will continue to do so. Today, we won't announce any concrete thinkings. We have concepts already, and then step by step, we will announce where we want to go.

Speaker #5: Double digits percentage. And also to reduce the options, by reducing complexity and also reducing our capital investment on this. And making our structures cleaner, and also providing for our customers a clearer profile with our products.

Speaker #2: And last but not least, we were very disciplined on M&A, which is another billion. And so we have to take into account that there's a slight seasonality.

Speaker #2: As you know, we were successful in the winter test where we made good progress in our JV with Rivian. But as you also know, subject to the successful winter test, we will invest in another billion in about a billion in Rivian, which will see an outflow in the second quarter.

Arno Antlitz: As you also know, subsequent to the successful winter test, we will invest in another EUR 1 billion in Rivian, which will see an outflow in Q2. All in all, we are really confident, and we said that last year on the conference call for last year, that the working capital measures are Well in place. The whole company is focused on cash flow. You know, we were like for years and years, we focused on EBIT. Now we really see a cultural change in the company. People are fighting for cash flow and net liquidity, for better working capital.

Speaker #5: We have already started this process. And the products which will come to the market right now, for example, the Polo or the Cupra Raval, have already benefit from this activities.

Speaker #2: All in all, we are really confident, and we said that last year, on the conference calls for last year, that the working capital measures are really well in place.

Speaker #5: And we will continue to do so. Today, we won't announce any concrete thinking. We have concepts already. And then, step by step, we will announce where we want to go.

Speaker #2: The whole company is focused on cash flow. You know, we were like for years and years, we focused on EBIT. Now we really see a cultural change in the company.

Speaker #5: But the clear goal overall is complexity reduction, cost reduction, investment reduction, and being more focused. And at the end, having more and better products, customer size for the different regions of the world.

Oliver Blume: Clear goal overall is complexity reduction, cost reduction, investment reduction, and being more focused, and at the end, having more and better products, customer size for the different regions of the world.

Speaker #2: People are fighting for cash flow and net liquidity for better working capital. So this is really now implemented in everybody's minds. And gives us a confidence that we will achieve the 3 to 6 billion this year.

Arno Antlitz: This is really now implemented in everybody's minds and gives us a confidence that we will achieve the EUR 3 to 6 billion this year. Obviously, it's much too early to change the guidance, but the building blocks are clear. Stringent cost work, I would like to remember your overhead cost reduction of almost EUR 1 billion in Q1, which is significant. Much more disciplined M&A, and disciplined R&D and CapEx combined, should by far compensate for potential headwinds we see from the market.

Speaker #2: Okay, thank you all for your excellent questions. I think this concludes the Q&A session. And we are now also at the end of our call.

Pietro Zollino: Okay. Thank you all for your excellent questions. I think this concludes the Q&A session. We are now also at the end of our call. If anything was left unanswered, as Rolf also mentioned during the investors and analysts call, please contact us. In Wolfsburg here, drop us a note, call us. I can only wish you all a pleasant week, stay safe, and looking forward to hear you next time. Thanks.

Speaker #2: Obviously, it's much too early to change the guidance. But the building blocks are clear. Stringent cost work, I would like to remember your overhead cost reduction of almost a billion in one quarter.

Speaker #2: If anything was left unanswered, as Rolf also mentioned during the investors and analysts call, please contact us in Wolfsburg here. Drop us a note, call us.

Speaker #2: Which is significant. Much more disciplined M&A. And disciplined R&D and CapEx x combined. Should by far compensate for potential headwinds we see from the market.

Speaker #2: And I can only wish you all a pleasant week. And stay safe. And looking forward to hear you next time. Thanks.

Operator: This concludes our conference call for today. Thank you for participating. You may now disconnect.

Speaker #3: Good morning, everyone, and a warm welcome to our first quarter 2026 results call of Volkswagen Group. Thanks for dialing in. This is, as usual, a joint call for both the media as well as investors and analysts, moderated by Rolf Woller, our Head of Treasury and Investor Relations and Corporate Communications. With us today are Oliver Blume, our CEO of the Volkswagen Group, and Arno Antlitz, CFO and COO of Volkswagen Group.

Speaker #3: Thank you very much.

Rolf Woller: Thank you very much.

Speaker #2: Thank you, Tim. And we will continue with Patrick Hummel from UBS. Patrick, please go ahead.

Rolf Woller: Thank you, Tim. We will continue with Patrick Hummel from UBS. Patrick, please go ahead.

Speaker #5: Thank you, Rolf. Good morning, everybody. I would just like to follow up, Ollie, please, regarding your comments about the cost and capacity alignment. I think the point Tim brought up was also about whether you can get ahead of the wave, so to say, or you remain reactive to safeguard margins rather than driving a margin recovery.

Patrick Hummel: Thank you, Rolf. Good morning, everybody. I would just like to follow up, Oli, please, regarding your comments about the cost and capacity alignment. I think the point Tim brought up was also about, you know, whether you can get ahead of the wave, so to say, or you remain reactive, to safeguard margins rather than, you know, driving a margin recovery. Can I ask a bit more precisely what kind of timeline we have to expect here for the, for the exercise to cut the capacity by another 1 million? I guess, the focus here is on that half million that's yet to come in Europe.

Speaker #5: So can I ask a bit more precisely what kind of timeline we have to expect here for the exercise to cut the capacity by another million, I guess, the focus here is on that half million.

Speaker #5: That's yet to come in Europe. Are we talking about the next one to two years so that we will already see a significant positive bottom line impact in 2027, '28?

Patrick Hummel: Are we talking about the next 1 to 2 years so that we will already see a significant positive bottom line impact in 2027, 2028? Or is it really back-end loaded towards the end of the decade? My second question, Arno, goes to you. I'd just like to get a quick update on the sensitivities to the Middle East situation. We're now 2 months into that crisis, and so far it seems the demand impact is very limited. Can you just remind us for the coming quarters, what your biggest potential pain points would be? Is it just a softening of Globestar?

Speaker #5: Or is it really back and loaded towards the end of the decade? And my second question, Arno, goes to you. I'd just like to get a quick update on the sensitivities to the Middle East situation.

Speaker #5: We're now two months into that crisis. And so far it seems the demand impact is very limited. Can you just remind us for the coming quarters what your biggest potential pain points would be?

Speaker #5: Is it just the softening of global SAR? Is it maybe an acceleration of the commodity inflation in the second half, as we've heard from some of your competitors?

Patrick Hummel: Is it, you know, maybe an acceleration of the commodity inflation in the second half, as we've heard from some of your competitors, just to get a better feel about the risks related to the Middle East situation? Thank you.

Speaker #5: Just to get a better feel about the risks related to the Middle East situation. Thank you.

Speaker #3: Yeah, Patrick. In terms of cost reduction, as you know, the implemented programs we are running are providing already results. For example, the overhead reduction Arno mentioned.

Oliver Blume: Patrick, in terms of cost reduction, as you know, the implemented programs we are running are providing already results. For example, the overhead reduction Arno mentioned. On the other side, what we will strengthen right now is we call it operational excellence, is even more cost work in terms of engineering, purchasing, production, sales, and then quality, for example. This is a program which has already started. We provide results already this year and even more in the period up to 2030. The other part, adapting capacities in China, the 1.5 are already done.

Speaker #3: On the other side, what we will strengthen right now is we call it operational excellence. It's even more cost work in terms of engineering, purchasing, production, sales, and then quality for example.

Speaker #3: This is a program with us already started. We'll provide results already this year. And even more, in the period up to 2030. The other part, adapting capacities, in China, the 1.5 are already done.

Oliver Blume: In Germany, we announced the 1 million, which is on a good way. We will complete up to 2028. For example, the adaptation we have done already in Audi in Neckarsulm and in Ingolstadt, and the adaptations we are doing at Volkswagen. A further 500,000 will be in the program by 2030. Now, that depends a bit what we do have in the production lines right now, what opportunities we have to switch. Most importantly is the reduction of our plant costs. You know, that's the main target. Last year, we were able to reduce our plant cost of over 20%, and that's ongoing and even more.

Speaker #3: In Germany, we announced the 1 million. Which is on a good way. We will complete up to 2028. For example, the adaption we have done already in Audi in Neckarsulm and in Ingolstadt and the adaptions we are doing at Volkswagen.

Speaker #3: And a further 500,000 will be in the program by 2030. Now that depends a bit what we do have in the production lines right now.

Speaker #3: What opportunities we have to switch. But most importantly is the reduction of our plant costs. That's the main target. And last year we were able to reduce our plant cost of over 20%.

Speaker #3: And that sets ongoing and even more. And there's no argument not being able working on the same cost level like competitors in Europe. And there especially our plants in Eastern and Western Europe are helping.

Oliver Blume: There's no argument not being able working on the same cost level like competitors in Europe. There, especially our plants in Eastern and Western Europe are helping.

Speaker #2: Yeah, Patrick, I would like to give you some flavor perhaps a little bit more on the details. On fuel and on other costs, we expect 20 to 30 million a month for transportation.

Arno Antlitz: Yeah, Patrick, I would like to give you some flavor, perhaps a little bit more on the details on fuel and on other costs. We expect EUR 20 to 30 million a month for transportation. We have planned about 50,000 to 100,000 cars in the region, which is less than 1% of our volume, which now try to find alternative ways to deliver the cars to the customers, specifically for the premium brands. I think Porsche found good ways there. On the raw material side, we are hedged most of it. Of course, you never hedge 100%, we have some good hedgings.

Speaker #2: We have planned about 50 to 100,000 cars in the region, which is less than 1% of our volume. But which now try to find alternative ways to deliver the cars to the customers, specifically for the premium brands.

Speaker #2: I think Porsche found good ways there. On the raw material side, we are hedged. Most of it. Of course, you never hedge 100%. But we have some good hedgings.

Arno Antlitz: Also on the order intake, I just said that the order intake is also slightly increased. What we cannot rule out second-round effects, both in terms of global demand and on material cost. Of course, this is a risk. We cannot rule out that, but this is another motivation to increase our efforts on the cost side on the cash flow side to compensate for that. This is where we stand currently.

Speaker #2: And also on the order intake, I just said that the order intake is also slightly increased. So what we cannot rule out second round effects, both in terms of global demand and on material cost.

Speaker #2: Of course, this is a risk. And we cannot rule out that. But this is another motivation to increase our efforts on the cost side to on the cash flow side to compensate for that.

Speaker #2: So this is where we stand currently.

Speaker #5: Thank you both.

Rolf Woller: Thank you both.

Speaker #2: Thank you, Patrick. And we will continue now with Mike Tindall from HSBC. Mike, please go ahead.

Arno Antlitz: Thank you, Patrick. We will continue now with Mike Tyndall from HSBC. Mike, please go ahead. Hello. Not sure if you can hear me. Still showing muted. We can. You can hear me? Excellent. Yes. Loud and clear. Mike from HSBC. Just a couple of questions, if I can. I'm trying to get my head around the 9 million of capacity, which is broadly where we are in current sales, but we've got growth in North America and the Global South, and if I'm not wrong, growth in China. Is there an implication here that potentially Europe gets smaller from a volumes perspective, or am I just trying to jiggle the numbers around too much? The other question is, your components business did a 9% margin in Q1. I mean, compared to other suppliers, that's a very rich margin.

Speaker #6: Hello. Not sure if you can hear me. Still showing muted.

Speaker #2: We can.

Speaker #6: You can hear me? Excellent. Mike from HSBC. Just a couple of questions, if I can. I'm trying to get my head around the 9 million of capacity, which is broadly where we are in current sales.

Speaker #6: But we've got growth in North America and the global south. And China. Is there an implication here that potentially Europe gets smaller from a volumes perspective?

Speaker #6: Or am I just trying to jiggle the numbers around too much? And then the other question is, your components business, did a 9% margin in Q1.

Speaker #6: I mean, compared to other suppliers, that's a very rich margin. And I know that one part feeds into the other. But where are you in terms of benchmarking what you're paying the components business versus third parties?

Mike Tyndall: I know that, you know, one part feeds into the other, but where are you in terms of benchmarking what you're paying the components business versus third parties? Is there scope there to actually squeeze more cost out of that? Curious to know why that margin is so high when Brand Group Core is potentially lower than it should really be. Thanks.

Speaker #6: Is there scope there to actually squeeze more costs out of that? Curious to know why that margin is so high when brand group core is potentially lower than it should really be.

Speaker #6: Thanks.

Speaker #3: Yeah, Mike. Let me start with your first question. And then I hand over to Tarano with a component question. To make it very clear, the 9 million capacity is what we have seen in an average during the last five years.

Oliver Blume: Yeah, Mike, let me start with your first question, and then I hand over to Arno with the components question. To make it very clear, the 9 million capacity is what we have seen in average during the last 5 years. Our product planning is ambitious and also our sales planning is ambitious. What we are doing here is on the one hand side to adapt our cost structure for 9 million cars in terms of a risk scenario. What could happen if? On the other side, we are working on a more ambitious sales planning. This leads us to bring down our break-even situation and making our financial situation more and more robust. Now, that's behind this planning.

Speaker #3: Our product planning is ambitious. And also our sales planning is ambitious. But what we are doing here is, on the one hand side, to adapt our cost structure for 9 million cars in terms of a risk scenario.

Speaker #3: What could happen if? And on the other side, we are working on a more ambitious sales planning. And this leads us to bring down our break-even situation.

Speaker #3: And making our financial situation more robust. That's behind this planning. And when at the end, all the new products and their very confident because of the feedback we are getting right now for all the new products, coming to the market right now, we would be better that we'll be in positive effect in terms of our margin situation and EBIT at the end.

Oliver Blume: When at the end, all the new products, we are very confident because of the feedback we are getting right now for all the new products coming to the market right now. We would be better. There will be an positive effect, in terms of our margin situation and EBIT at the end.

Arno Antlitz: Go ahead. Yeah, Mike, and to your second question. First and foremost, the component business, the majority of the component business is also part of the Volkswagen AG. Just to remind you, in the Volkswagen AG, we have the component business in Kassel, which is doing gearboxes, Salzgitter, engine plants, and Braunschweig, steering and extra components. All the cost efforts we see so far. For example, I said since 2023, 15,000 reductions in the Volkswagen AG is always also happening in the component business. Because they have 3 big plants there. Also, the improvement in overhead costs.

Speaker #2: Yeah, Mike. And the second question. First and foremost, the component business, the majority of the component business is also part of the Volkswagen AG.

Speaker #2: Just to remind you, in the Volkswagen AG, we have the component business in Kassel, which is doing gearboxes, Salzgitter engine plants, and Braunschweig steering and axle components.

Speaker #2: And so all the cost efforts we see so far for example, I said since 2023, 15,000 reductions in the Volkswagen AG is always also happening in the component business.

Speaker #2: Because they have three big plants there. Also, the improvement in the overhead costs. And what you can see now here is we haven't basically changed the pricing logic between the brand groups and the brands and the component business.

Arno Antlitz: What you can see now here is we haven't basically changed the pricing logic between the brand groups and the brands and the component business. We kept basically the logic of the prices stable. What you see now is the, basically, we measure the improvement of the Volkswagen turnaround of the Volkswagen Zukunft project in that it's working in the component business. Nevertheless, we need more contributions also from our component business. The competition is coming to Europe and our component business, for example, is also producing electric engines, producing batteries for the material. We need also to significantly step up the improvements there in order to be competitive for our cars versus competition. Okay. That sounds great. Thank you.

Speaker #2: And we kept basically the logic of the prices stable. basically we measure the improvement of the Volkswagen turnaround of the Volkswagen Zukunft project that it's working in the component business.

Speaker #2: Nevertheless, we need more contributions also from our component business. The competition is coming to Europe. And our component business, for example, is also producing electric engines, producing battery batteries for the material.

Speaker #2: And we need also to significantly step up the improvements there in order to be competitive for our cars versus competition.

Speaker #6: Okay. That sounds great. Thank you.

Speaker #2: Thank you, Mike. And we will continue with Tom Narayan from RBC. Tom, please go ahead.

Arno Antlitz: Thank you, Mike. We will continue with Tom Narayan from RBC. Tom, please go ahead.

Speaker #7: Hi. Thanks, Tom Narayan, an, RBC. The first one, Arno on the 26 guidance. I noticed there wasn't any booking for the benefit on the IEPA the Supreme Court ruling in the US.

Tom Narayan: Hi. Thanks. Tom Narayan, RBC. The first one, Arno, on the 2026 guidance, I noticed there wasn't any booking for the benefit on the IEEPA, the Supreme Court ruling in the US. Other competitors have booked pretty large benefits there in Q1. I was just curious why you guys didn't book that. I know you have a lot of hedging, but the other OEMs are noticing pretty big H2 headwinds. Is it that you're not expecting those H2 headwinds? That's the first question on the guidance. Oli, on the Chinese partnerships, is there any potential for the US? I know it's a politically maybe sensitive topic, but what do you see out of as that as a possibility of the Chinese relationships in the US? Thanks.

Speaker #7: Other competitors have booked pretty large benefits there. In Q1. I was just curious why you guys didn't book that. And then I know you have a lot of hedging but the other OEMs are noticing pretty big H2 headwinds.

Speaker #7: Is it that you're not expecting those H2 headwinds? That's the first question on the guidance. And then Ollie on the Chinese partnerships. Is there any potential for the US?

Speaker #7: I know it's a politically maybe sensitive topic. But what do you see as that as a possibility of the Chinese relationships in the US?

Speaker #7: Thanks.

Arno Antlitz: Tom, I start with the second question in terms of I assume you're referring to the EBIT bridge, right?

Speaker #3: Tom, I start with the second question in terms of I assume you're referring to the EBIT bridge, right? That it's basically positive. Yeah. That's a little bit counterintuitive.

Tom Narayan: Yeah.

Arno Antlitz: That it's basically positive. That's a little bit counterintuitive. It shows that we have very good hedgings there in place. I would say, it's also versus last year, you know. It was the EBIT bridges, the effect versus last year. Last year, I think it was negative Q1 by EUR -300 something, also EUR -400. So it's basically a reversal of some of the effects. We don't expect the positive effect throughout the year to stay here. I mean, we have to face realities, that major currencies are weak. We have a lot of exports in dollar regions and others.

Speaker #3: It shows that we have some very good hedging there in place. But if you I would say and it's also versus last year. It was the EBIT bridge is the effect versus last year.

Speaker #3: And last year, I think it was negative first quarter by minus 300 something, also minus 400. So it's basically a reversal of some of the effects.

Speaker #3: But we don't expect that the positive effect throughout the year to stay here. I mean, we have to face realities. Major currencies are weak.

Speaker #3: We have a lot of exports in dollar region and others. Since we are hedged, we don't expect the significant headwind in that topic. In terms of EBIT bridge, but for the operative business, it's obviously a headwind.

Arno Antlitz: Since we are hedged, we don't expect a significant headwind in that topic, in terms of EBIT bridge, but for the operative business, it's obviously a headwind. As you know, hedges don't last forever, and the next hedges will be more expensive. Yes, it's a headwind. It's, I would say, a temporary effect positive, but it shouldn't turn significant negative throughout the year. In terms of IEEPA, nothing is booked in Q1 results. It's too early to say to what extent we will book a benefit in the remainder of the year. We will come back to you with or to all of you with that topic potentially in Q2.

Speaker #3: And as you know, hedges don't last forever. And the next hedges will be more expensive. So yes, it's a headwind. I would say a temporary effect, positive.

Speaker #3: But it shouldn't turn significant negative throughout the year. And in terms of EAPA, nothing is booked in Q1 results. It's too early to say to what extent we will book a benefit in the remainder of the year.

Speaker #3: We will come back to you with or to all of you with that topic potentially in Q2.

Speaker #2: Tom, coming to your second question in terms of Chinese partnerships. First of all, Volkswagen Group, it's there in a very positive situation as a global automotive player, having a strong footprint in China.

Oliver Blume: Tom, coming to your second question in terms of Chinese partnerships. First of all, Volkswagen Group is there in a very positive situation as a global automotive player, having a strong footprint in China, but also in the Western world, where we can benefit from innovation speed and processes. We decided to go for 2 ecosystems. One is China, also with our partnership there, for example, with XPeng and Horizon Robotics. We can see already the first results with our first sonar architecture, the SEER we presented at the end of last year, and the first cars are entering into the market right now. This is a blueprint in terms of architecture also for our Rivian joint venture.

Speaker #2: But also in the Western world. Where we can benefit from innovation speed and then processes. We decided to go for two ecosystems. One is China.

Speaker #2: Also with our partnership there. For example, with Chao Peng and then Horizon Robotics. We can see already the first results. With our first 7L architecture.

Speaker #2: They see her. We presented at the end of last year. And the first cars are entering into the market right now. And this is a blueprint.

Speaker #2: In terms of architecture, also for our Rivian joint venture. In the Western world, we are have a distance of around 1 and a half year.

Oliver Blume: In the Western world, we are have a distance of around one and a half year comparing with our Chinese activities. This brings us in the situation to have a clear comparison in terms of speed and content, what we have achieved in China. We are very happy about the progress I mentioned with our Rivian joint venture. Coming back to the 2 ecosystems what we are doing in China right now will help us also for the whole southern hemisphere. Yeah, we can localize our local platforms from China, the China main platform, bringing this to a global main platform, for example, for South America.

Speaker #2: Comparing with our Chinese activities. And this brings us in the situation to have a clear comparison. In terms of speed and content. What we have achieved in China.

Speaker #2: But we are very happy about the progress. I mentioned with our Rivian joint venture. Coming back to the two ecosystems. What we are doing in China right now will help us also for the whole Southern Hemisphere.

Speaker #2: We can localize our local platforms from China. The China main platform. Bringing this to a global main platform. For example, for South America. And we have huge export opportunities now from China.

Oliver Blume: We have huge export opportunities now from China, being on a competitive technological level, but also cost competitive with the Chinese competitors. This helps us to enter Southeast Asia, for example, Middle East, India, but at the end, also Africa. In the Western Hemisphere, this footprint from China helps us to speed up and build the right offer for the Western world, where we are restricted because of regulations to use Chinese software. Therefore, we have made a clear differentiation in between the two worlds. Now we have the flexibility and having the right product for the right region to fulfill the customer expectations, but also the right cost structure.

Speaker #2: Being on the competitive technological level. But also cost competitive with the Chinese competitors. And this helps us to enter Southeast Asia for example. Middle East.

Speaker #2: India. But at the end also Africa. And in the Western Hemisphere. This footprint from China helps us to speed up. And build the right offer for the Western world.

Speaker #2: Where we are restricted because of regulations to use Chinese software. And therefore we have made a clear differentiation in between the two worlds. But now we have the flexibility and having the right products for the right region to fulfill the customer expectations.

Speaker #2: But also the right cost structure.

Rolf Woller: Understood. Thank you.

Speaker #7: Understood. Thank you.

Speaker #2: Thank you, Tom. And we move on to the next question which comes from Jose Asumendi from JP Morgan. Jose, please go ahead.

Arno Antlitz: Thank you, Tom. We move on to the next question, which comes from Jose Asumendi from J.P. Morgan. Jose, please go ahead.

Speaker #3: Thank you all. Good morning, Ollie and Arno. A couple of questions. Ollie, can you speak a bit about your tech stack that you have in China?

José Asumendi: Thank you, Rolf. Morning, Oli and Arno. A couple of questions. Oli, can you speak a bit about your tech stack that you have in China? Thank you very much for the capital markets day you recently did. I'd like to understand a bit better which parts of that tech stack and know-how that you're building in China you can actually bring back to Europe, or maybe which suppliers you think you could even co-collaborate closer in Europe to improve the cost competitiveness and bring that tech stack into European businesses. Clearly, the products you're launching in China are some of them clearly superior to what you're offering in Europe.

Speaker #3: Thank you very much for the capital markets that you recently did. I'd like to understand a bit better which parts of that tech stack and know-how that you're building in China you can actually bring back to Europe.

Speaker #3: Or maybe which suppliers you think you're going to collaborate closer in Europe to improve the cost competitiveness and bring that tech stack into the European businesses.

Speaker #3: Clearly, the approach you're launching in China are some of them clearly superior to what you're offering in Europe. Also interested, please, in hearing if you will be open to open up your production sites your capacity in Europe to your partners ACIC or FAW.

José Asumendi: Also interested, please, in hearing if you will be open to open up your production sites, your capacity in Europe to your partners, SAIC or FAW. Second question, Arno, can you talk a bit about the margin progression on your progressive brand? Do you think there's a chance to see a sequential margin improvement in Q2 versus Q1 in the light of the improved earnings in Q1? Thank you.

Speaker #3: ACIC or FAW. And second question, Arno, can you talk a bit about the margin progression on your progressive brand? Do you think there's a chance to see a sequential margin improvement in Q2 versus Q1 in the light of the improved earnings in the first you.

Oliver Blume: Jose, on the one hand side, we can benefit from the innovation speed and from China, which we can transfer also the process knowledge, but especially the cost work we have done. What we presented last week was a cost reduction of 40% to 50%, depending on the platform. All these measures, and that's a great opportunity, we can implement right now on our western platforms, which has already been kicked off. On the other side, all activities we are doing there also with our component business, Arno Antlitz talked before, and suppliers in terms of hardware. We can benefit in terms of sourcing because knowing the right partners there and the best solutions, that's an opportunity.

Speaker #4: Jose, on the one hand side, we can benefit from the innovation speed. And from China. Which we can transfer also the process knowledge. But especially the cost work we have done what we presented last week was a cost reduction of 40 to 50 percent depending on the platform.

Pietro Zollino: Good morning, everyone, and a warm welcome to our Q1 2026 results call of Volkswagen Group. Thanks for dialing in. This is, as usual, a joint call for both the media, as well as investors and analysts, moderated by Rolf Woller, our Head of Group Treasury & Investor Relations, and myself, Pietro Zollino, Head of Corporate Communications. With us today are Oliver Blume, our CEO of the Volkswagen Group, and Arno Antlitz, CFO and COO of Volkswagen Group. You should have received the press release, the interim financial report, and all other related materials, which were published already this morning. If you do not have them, you can find all documents on our group website. In case of any issue, give us a call or drop us an email.

Speaker #4: And all these measures. And that's a great opportunity. We can implement right now on our Western platforms. Which is already has already been kicked off.

Speaker #3: You should have received the press release, the interim financial report, and all other related materials which were published already this morning. If you do not have them, you can find all documents on our group website.

Speaker #4: And on the other side, all activities we are doing there also with our component business. Arno, talked before. And suppliers in terms of hardware.

Speaker #4: We can benefit in terms of sourcing because knowing the right partners there. And the best solutions. That's an opportunity. And software we will be more restrictive because developing our own software for the Western world.

Speaker #3: In case of any issue, give us a call or drop us an email. Now, let me hand over to Rolf, who will give you a brief run-through of the next essay, which will take one and a half hours.

Pietro Zollino: Now let me hand over to Rolf, who will give you a brief run-through of the next, let's say, 1 and a half hours. Thank you.

Oliver Blume: In software, we will be more restrictive, because developing our own software for the Western world, but innovations and speed and processes helps a lot. Overall, having been in China last week, the media feedback was great. We got the by far biggest media feedback and to reach of all companies, including the Chinese companies there in China. That has shown the great response and how well our products are received in the market. In terms of capacities, we always look for intelligent solutions. As you have seen, in terms of Dresden or, we are now in good negotiations for Osnabrück, for example, with defense companies. That's one approach.

Speaker #3: Thank you.

Speaker #2: Thank you, Pietro. Good morning to everyone. From a very sunny day in Wolfsburg, thank you for joining us today. Let's have a look at our agenda.

Rolf Woller: Thank you, Pietro. Good morning to everyone from a very sunny day in Wolfsburg, and thank you for joining us today. Let's have a look at our agenda. Oli will start with the financial highlights of Q1 and will then present our transformation plan towards the Volkswagen Group Target Picture 2030. Arno will go on with the key developments of Q1. After that, we will take a closer look at the financial results and the full-year outlook 2026. Following the presentation, we will first host a Q&A session with Oli and Arno for the investor and analyst community, moderated by myself. After the session, we will have a short break before we continue with the media Q&A, which will then be hosted by Pietro.

Speaker #4: But innovations and speed and processes helps a lot. Overall, and having been in China last last week, the media feedback was great. We got the by far biggest media feedback and reach of all companies.

Speaker #2: Ollie will start with the financial highlights of the first quarter, and we'll then present our transformation plan towards the Volkswagen Group target picture 2030.

Speaker #2: Arno will go on with the key developments of the first quarter. After that, we will take a closer look at the financial results and the full-year outlook presentation. We will first host the Q&A session with Ollie and Arno for the investor and analyst community.

Speaker #4: Including the Chinese companies. There in China and that has shown the great response and how well our products are received in the market. In terms of capacities, we always look for intelligent solutions.

Speaker #2: Moderated by myself. And after the session, we will have a short break before we continue with the media Q&A, which will then be hosted by Pietro.

Speaker #4: If you have seen in terms of Dresden or we are now in good negotiations for Osnabrück for example. With defense companies. That's one approach.

Speaker #2: Since today's call includes forward-looking statements, the safe-harbor language and other cautionary statements on the slide will govern today's presentation. I encourage you to read the disclaimer carefully, as all forward-looking statements are qualified by this language.

Rolf Woller: Since today's call includes forward-looking statements, the safe harbor language and other cautionary statements on this slide will govern today's presentation. I encourage you to read the disclaimer carefully, as all forward-looking statements are qualified by this language. In the interest of time, I will not read it to you. With that, I hand it over to Oli. Oli, please go ahead.

Speaker #4: And the other approach we also will check if there are opportunities for our Chinese cars in Europe. Or for opening this for partnering maybe with our partners.

Oliver Blume: The other approach, we also will check if there are opportunities for our Chinese cars in Europe, or for opening this for partnering maybe with our partners we do have in China. We haven't taken a decision, but the solution field is flexible. This is always a clever solution to reduce capacities in terms of changing this to a different owner, like defense company or sharing capacities with other business opportunities, right? The second option at the end, and that's the worst one and most costly one, is to close a plant. We will go on this topic very openly.

Speaker #2: In the interest of time, I will not read it to you. And with that, I hand it over to Ollie. Ollie, please go ahead.

Speaker #4: We do have in China we haven't taken a decision. But the solution field is flexible. And this is always a clever solution to reduce capacities in terms of changing this to a different owner.

Speaker #3: Thank you, Rolf. Thank you, Pietro. Good morning, ladies and gentlemen, and also a warm welcome. Let me start with a highlight year to date. Our model momentum in Europe continues.

Oliver Blume: Thank you, Rolf. Thank you, Pietro. Good morning, ladies and gentlemen. Also, a warm welcome. Let me start with a highlight. Year to date, our model momentum in Europe continues. Importantly, the first two of a series of new vehicles of the electric urban car family have been launched to the market, the Cupra Raval, and yesterday, the ID. Polo, and books are now open for customer orders. In China, we are switching to delivery mode with our In China, for China strategy. The Beijing Auto Show marked an impressive start of our model offensive, with locally developed NEVs geared to Chinese customers' taste and highly competitive in terms of technologies and costs. In the US, Volkswagen Chattanooga assembly plant will shift to higher volume models, such as the second generation of the Atlas, which will be in the showrooms from fall.

Speaker #3: Importantly, the first two of a series of new vehicles from the electric urban car family have been launched to the market: the Cupra Raval, and yesterday, the ID.

Speaker #4: Like defense company or sharing capacities with other business opportunities. And the second option at the end and that's the worst one and most costly one is to close a plant.

Speaker #3: Polo and books are now open for customer orders. In China, we are switching to delivery mode with our 'In China for China' strategy. The Beijing Auto Show marked an impressive start of our model offensive, with locally developed NEVs geared to Chinese customers' taste and highly competitive in terms of technology and costs.

Speaker #4: But we will go on this topic very, very openly.

Speaker #2: Yeah, Jose, in terms of margin, we expect and we need to step up in margin. Our guidance is four to five and a half percent.

Arno Antlitz: Yeah, Jose, in terms of margin, we expect and we need a step up in margin. Our guidance is 4% to 5.5%. We currently reported at 3.3%, and we wanna achieve a reported margin within that guideline. We have also some promising results. Look at Brand Volkswagen, you know. Yes, they are more closer to zero currently, but if you take into account the write-off for the ID.4 in US, they are at 3.5% currently running. We have a typical seasonality in our business that Q2 and specifically Q4 are normally stronger than the Q1. It's also a good chance for Audi. Audi now have a refreshed portfolio.

Speaker #2: We are currently reported at 3.3. And we want to achieve a reported margin within that guideline. And we have also some promising results. Look at Brand Volkswagen.

Speaker #3: In the US, Volkswagen's Shetland Nuga assembly plant will shift to higher-volume models such as the second generation of the Atlas, which will be in showrooms from fall.

Speaker #2: Yes, they are more closer to zero currently. But if you take into account the write-off for the ID.4 in the US, they are at 3.5 percent currently running.

Speaker #3: While the electric ID.4 is still available in the US, we decided to end local production of the ID.4 from April 2026. The Rivian-Volkswagen technology joint venture successfully completed winter testing of the first vehicles equipped with the newly developed software-defined vehicle architecture.

Speaker #2: And we have a typical seasonality in our business that Q3 and sorry, Q2 and specifically Q4 are normally stronger than the first quarter. And it's also a good chance for Ollie Ollie have a refresh portfolio they are currently trading at 4.2.

Speaker #3: Lastly, we continued the implementation of our active portfolio management. Traton reduced the holding in Sinotruck, recording a cash inflow of €0.2 billion in the first quarter, a second step magnitude of €400 million.

Arno Antlitz: They are currently trading at 4.2. They expect 6 to 8 with a lot of product momentum coming, specifically S and RS models, which are really doing very well in order intake. Last but not least, we really drive forward the restructuring measures throughout the whole group. You saw the fixed cost improvement Q1 EUR 1 billion, and obviously we wanna continue that. That should give also more tailwind. We have to be a little bit cautious. Now we will ramp up the BEVs in H2, which are margin dilutive. Yes, there might be some economic headwinds from the conflict in the Middle East.

Speaker #2: They expect six to eight with a lot of product momentum coming specifically as an RS models which are really doing very well in order intake.

Speaker #2: And last but not least, we really drive forward the restructuring methods throughout the whole group. You saw the fixed cost improvement first quarter billion and obviously we want to continue that.

Speaker #3: In addition, Porsche has closed an agreement to sell its stake in Bugatti Rimac Group. Closing of the transaction is contingent on regulatory approvals. Looking at the financial highlights, deliveries to customers were down 4% in Q1, mainly due to the declines in the US and China.

Speaker #2: The chips should us give also more tailwind. We have to a little bit cautious. We will ramp up the BVs in the second half of the year which are margin dilutive.

Speaker #2: And yes, there might be some economic headwinds from the conflict in the Middle East. But all in all, taking this into account, we still are fully underway to achieve our guidance of four to 5.5 percent.

Speaker #3: Nevertheless, we kept our global market share stable. Our order book situation in Europe remains very encouraging. It shows that our new vehicles are resonating well with customers.

Arno Antlitz: All in all, taking this into account, we still are fully underway to achieve our guidance of 4% to 5.5% and confirm the guidance.

Oliver Blume: Our order book situation in Europe remains very encouraging. It shows that our new vehicles are resonating well with customers. Revenues in the first quarter were down 2%, in line with the unit sales decline, excluding China joint venture volumes. Automotive net cash flow was strong at around EUR 2 billion. This shows that the working capital measures implemented last year by Arno and the teams are delivering lasting results. Net liquidity was almost on par with year-end 2025, despite the redemption of EUR 1.75 billion hybrid bond in February. Group operating profit stood at EUR 2.5 billion against the backdrop of increased geopolitical tension and declining vehicle markets as well as, again, significant special effects. The achieved return on sales of 3.3% is a solid result.

Speaker #3: Revenues in the first quarter were down 2% in line with the unit sales decline excluding China joint venture volumes. Automotive net cash flow was strong at around 2 billion euros.

Speaker #2: And confirm the guidance.

Speaker #3: Super. Thank you.

Rolf Woller: Super. Thank you.

Speaker #2: Thank you, Jose. And we will continue with Horst Schneider from Bank of America. Horst, please go ahead.

Arno Antlitz: Thank you, Jose. We will continue with Horst Schneider from Bank of America. Horst, please go ahead.

Speaker #5: Yes, thank you. And good morning, team. Good morning, Ollie. Good morning, Arno. The first question that I have that relates to the impact on consumer demand coming from the high oil price.

Horst Schneider: Yes, thank you. Good morning, Oli. Good morning, Arno. The first question that I have relates to the impact on consumer demand coming from the high oil price. Since you are the largest, one of the largest car makers of the world, clearly the market share monster in Europe, I think you can maybe best answer this question. It's not just about Q1 average, it's more about latest trends that you have seen since the oil price spiked. What shift do you see in terms of demand shift from ICE to BEV, down trading in segments, differences as premium versus mass, and also between diesel and gasoline? That's question block number one.

Speaker #3: This shows that the working capital measures implemented last year by Arno and the teams are delivering lasting results. Net liquidity was almost on par with year-end 2025, despite the redemption of a €1.75 billion hybrid bond in February.

Speaker #5: Since you are the largest one of the largest carmakers of the world, clearly the market share monster in Europe, I think you can maybe best answer this question.

Speaker #3: Group operating profit stood at 2.5 billion euros, against the backdrop of increased geopolitical tension and declining vehicle markets, as well as again significant special effects that achieved return on sales of 3.3% is a solid result.

Speaker #5: And it's not just about Q1 average. It's more about latest trends that you have seen since the oil price spiked. So what shift do you see in terms of demand shift from ICE to BEV?

Speaker #5: Down trading in segments? Differences is premium versus mass? And also between diesel and gasoline. So that's question block number one. The number two is a little bit following up to that what also Jose has asked on if you are prepared to share plans with Chinese OEMs.

Speaker #3: But we must also be clear. Our current business model and the changing environment are not generating sufficient returns. Even before special effects, our margin is at only 4.3%.

Oliver Blume: We must also be clear, our current business model and the changed environment is not generating sufficient returns. Even before special effects, our margin is at 4.3% only. US tariffs are not included in the special effects. This is clearly too low to finance future investments, pay attractive dividends, and strengthen our financial position at the same time. We must and will continue to reduce complexity, focus investments on what wins customers, and continue execution across the group while navigating industrial transformation, geopolitical uncertainty, and stagnant revenue prospects in our industry, especially in Europe. The need for action was clearly recognized in 2023. A comprehensive realignment was therefore kicked off and communicated in June of that year in a Capital Markets Day. Since then, a comprehensive action plan has been put into implementation across the key success factors, products, regions, software, and cost programs.

Horst Schneider: The number two is a little bit following up to that, what also Jose has asked on if you are prepared to share plans with Chinese OEMs. This seems to become kind of industry trend. We heard that also Stellantis wants to do that, so seems that several car makers are thinking about that. I just want to get then your view on the European outlook more in general. Isn't that a bad sign for Europe? Because in the way the industry is opening up the market to the Chinese competition, opening up to a wolf in sheep's clothing, potentially. Is the outlook from here that Europe can just get worse, the competition is heating up, and that the incumbents lose more market share? Thank you.

Speaker #5: This seems to become kind of industry trends. So we heard that also Stellantis wants to do that. So seems that several carmakers are thinking about that.

Speaker #3: US tariffs are not included in the special effects. This is clearly too low to finance future investments, pay attractive dividends, and strengthen our financial position at the same time.

Speaker #5: And I just want to get then your view on the European outlook more in general. Isn't that a bad sign for Europe? Because in the way the industry is opening up, the market to the Chinese competition opening up to evolve in cheap closing potentially.

Speaker #3: We must and will continue to reduce complexity, focus investments on what wins customers, and continue execution across the Group while navigating industrial transformation, geopolitical uncertainty, and stagnant revenue prospects in our industry, especially in Europe.

Speaker #5: So is the outlook from here that Europe can just get worse? That competition is heating up and that the incumbents lose more market share?

Speaker #5: Thank you.

Speaker #2: Yeah, Horst. I start with we are just like two days ago, a discussion what is your department called? Volkswagen.

Oliver Blume: Yeah, Horst, I start with we had just like two days ago, a discussion. Rolf, what is your department called Volkswagen?

Speaker #3: The need for action was clearly recognized in 2023. A comprehensive realignment was therefore kicked off and communicated in June of that year at a Capital Markets Day.

Arno Antlitz: The economics.

Speaker #3: The economics.

Speaker #2: Economic team and they showed us all the risks. And they did some really great scenarios on how long the conflict lasts. What has been full prices in different scenarios?

Oliver Blume: Economic

Arno Antlitz: Team and they showed us all the risks, and they did some really great scenarios on how long the conflict lasts, what has been full prices in different scenarios. Yes, there might be a headwind coming up in terms of overall market demand. But you ask, and then Sten Pud and others, they will include that in their total market guidance. But what we currently see within us, we don't see these effects right now. We have a strong order book. Yes, the March was a little bit weaker but still strong.

Speaker #3: Since then, a comprehensive action plan has been put into implementation across the key success factors: products, regions, software, and cost programs. We have already made great progress.

Speaker #2: And yes, there might be a headwind coming up in terms of overall market demand. But you ask and then put another stable include that in their total market guidance.

Oliver Blume: We have already made great progress. These achievements helped offset significant earnings headwinds and enabled us to regain the competitive flexibility and freedom to act that we need. At the same time, from 2025 onwards, headwinds intensified further, driven by geopolitics, tariffs, and accelerated competition, particularly in China and Europe, against a backdrop of generally high uncertainty. This environment makes it clear that we need to step up our transformation plan. The progress we have made in recent years gives us momentum and the confidence to take the next steps now. This is why the executive board agreed on a substantial step-up and acceleration of our transformation plan. The result is the Volkswagen Group Target Picture 2030. It focuses on distinct levers. The most relevant are laid out on the chart. Reducing complexity in products, technology, and modular platforms while putting our customers at center stage.

Speaker #3: These achievements helped offset significant earnings headwinds and enabled us to regain the competitive flexibility and freedom to act that we need. At the same time, from 2025 onward, headwinds intensified further, driven by geopolitics, tariffs, and accelerated competition, particularly in China and Europe, against a backdrop of January high uncertainty.

Speaker #2: But what we currently see within us, we don't see these effects right now. We have strong order book. Yes, the March was a little bit weaker, but still strong.

Speaker #3: This environment makes it clear that we need to step up our transformation plan. The progress we have made in recent years gives us momentum and the confidence to take the next steps now.

Arno Antlitz: What we specifically saw, January, February, we saw a little bit more pressure on the residual values of the BEVs, and that turned in March, which is really positive. In total, we see more, I would say demand for BEVs or interest in BEVs. Let me put it that way. Although ICE and BEV order intake both increased. Yeah, this is where we currently stand. Of course, we cannot rule out that there are headwinds. We prepare for them on the cost side. We are cautious on capacity, what Oliver said. We don't wanna end up with being like on the inventory side, above ideal stock.

Speaker #2: And what we specifically saw January February saw a little bit more pressure on the residual values of the BVs. And that turned in March, which is really positive.

Speaker #3: This is why the executive board agreed on a substantial step up and acceleration of our transformation plan. The result is the Volkswagen Group target picture 2030.

Speaker #2: And in total, we see more I would say demand for BVs or interest in BVs. Let me put it that way. Although ICE and BV order intake both increased.

Speaker #3: It focuses on distinct levers. The most relevant are laid out on the chart—reducing complexity in products, technology, and modular platforms while putting our customers at center stage.

Speaker #2: Yeah, this is where we currently stand. Of course, we cannot rule out that there are headwinds. We prepare for them on the cost side.

Speaker #2: We are cautious on capacity. What Oliver said, we and we don't want to end up with being like on the inventory side above ideal stock.

Speaker #3: Aligning our production footprint to market realities. Exploiting growth priorities in the regions. Streamlining the portfolio. And improving execution through operational excellence, leadership, and lean governance.

Oliver Blume: Aligning our production footprint to market realities. Exploiting growth priorities in the regions. Streamlining the portfolio and improving execution through operational excellence, leadership, and lean government. First, product portfolio. We must reduce complexity and consequently drive synergies across the group. We will achieve this by significantly cutting the number of models from current about 150 and reducing the number of variants. We will focus on these projects that make a tangible difference for our customers. Second, technology roadmap. We will streamline our technology, technological toolbox and implement a much more focused approach with a targeted number of modular platforms, electric electronic architectures, ADAS stacks, and infotainment systems. Our tech stacks, RBT and SEER for the Western and Eastern Hemisphere, serve as a blueprint. Third, production network. We must adapt our production network to market realities.

Arno Antlitz: We carefully monitor that, but we don't see a major effect so far in Europe.

Speaker #2: We carefully monitor that. But we don't see major effect so far in Europe, Horst.

Horst Schneider: Arno, just quick follow-up. When you talk about rising BEV demand, I wonder if that is in the end then positive or negative for Volkswagen. You potentially save rebates that you don't have to provide anymore, but you also lose profitable ICE cars. What's the net equation? Is that positive or negative as BEV demand is increasing?

Speaker #3: First, product portfolio. We must reduce complexity and consequently drive synergies across the group. We will achieve this by significantly cutting the number of models from the current about 150 and reducing the number of variants.

Speaker #5: Arno, just quick follow-up. When you talk about rising BEV demand, I wonder if that is in the end then positive or negative for Volkswagen.

Speaker #5: You potentially save rebates that you don't have to provide anymore. But you also lose profitable ICE cars. So what's the net equation? Is that positive or negative if BEV demand is increasing?

Speaker #3: We will focus on these projects that make a tangible difference for our customers. Second, technology roadmap. We will streamline our technological toolbox and implement a much more focused approach with a targeted number of modular platforms, electric electronic architectures, ADA stacks, and infotainment systems.

Speaker #2: No, this is a great question. Currently, we are on the balance. That means we have a margin dilution on the BV side. But we still expect full year to book four to five hundred million.

Arno Antlitz: No, this is a great question. Currently, we are on the balance. That means, we have a margin dilution on the BEV side, but we still expect full year to book EUR 400 to 500 million on burden because we don't achieve our CO2 targets. More demand means more margin dilution. On the other hand, less burden on the CO2 regulation. Net-net, if we were to significantly increase our BEV share, that would be a margin dilution going forward, which is what we always said. Structurally, we must decide, we must distinguish between three, I would say, technology platforms. One is the MEB platform. For example, in our volume brand, we run currently ID.3, ID.4.

Speaker #2: On burden, because we don't achieve our CO2 targets. So more demand means more margin dilution. On the other hand, less burden on the CO2 regulation.

Speaker #3: Our tech stacks are VT and CR for the Western and Eastern Hemisphere, and they serve as a blueprint. Third, production network. We must adapt our production network to market realities.

Speaker #2: But net net, if we were to significantly increase our BEV share, that would be a margin dilution. Going forward, which is what we always said.

Speaker #3: Based on a low or no growth environment, this requires realigning our global technical capacity to approximately 9 million units per year, and consistently focusing on customer demand in each region.

Speaker #2: Structurally, we must decide we must distinguish between three, I would say, technology platforms. One is the MEB platform, for example, in our volume. Brand, we run currently ID3, ID4.

Speaker #3: This will lower our break-even point to a level that gives us the necessary flexibility in such a dynamic environment. Fourth, regional growth. We must foster regional growth opportunities.

Speaker #2: And now with the arrival of the ID2 family comes an MEB plus. Which has an LFP battery cell to pack. Next generation for electric trains.

Arno Antlitz: Now with the arrival of the ID.2 family comes an MEB Plus, which has an LFP battery, cell-to-pack, next generation for electric trains. There, the margin dilution effect is still there, but it's smaller. No, the ID. Cross is much closer to the T-Roc. This is we have to take into account. But until we implement our next generation SSP platform, the margin dilution effect will continue. Smaller than today, but it will continue.

Speaker #3: We steer centrally, but drive the business in the regions with more independence and decision-making power. North America and the Global South offer significant growth opportunities for Volkswagen Group.

Speaker #2: So the margin dilution effect is still there. But it's smaller. The ID2. Cross is much closer the T-Roc. And so we have to take into account but until we implement our next generation SSP platform, the margin dilution effect will continue.

Speaker #3: Fifth, operational excellence. We already bundled cross-functional responsibilities for development, procurement, production, sales, and quality at CEO level. This will allow us to increase the speed in decision-making, exploit synergies across the group, improve efficiency and quality, while keeping entrepreneurship and brand level.

Speaker #2: Smaller than today, but it will continue.

Speaker #5: Okay. Thank you.

Horst Schneider: Okay. Thank you.

Speaker #2: And Horst, good morning. Let me come to your second question situation in Europe. We expect tougher competition in the next years, especially from the Chinese.

Arno Antlitz: Thank you.

Oliver Blume: Horst, good morning. Let me come to your second question, situation in Europe. We expect a tougher competition in the next years, especially from the Chinese car manufacturers. We see ourselves well prepared. First of all, we have a great product momentum. Order intake is increasing both on ICE and BEVs. We are by far market leader for both. The new products we kicked off 3 years ago are now entering into the market. The Polo and there are others. One example, but others also in the BEV segment. Arno mentioned also the product momentum at Audi with S and RS models.

Speaker #3: Sixth, portfolio management. Our ambition must be to significantly streamline our portfolio, consistently aligned with the principles of the best owner approach. Arno will provide an update of our progress year to date.

Oliver Blume: Our ambition must be to significantly streamline our portfolio, consistently aligned with the principles of the best-owner principle. Arno will provide an update of our progress year to date. Seventh, leadership and culture. We will foster an even stronger performance culture. The changes we have implemented since the Capital Markets Day in June 2023 demonstrate. Fewer hierarchy levels and effective lean management structures with clear responsibility and targeted integrated incentive system are two key drive to change. We will build on this. Eighth, group governance. Clear decision-making structures, streamlined processes, and greater accountability at all levels will make our company more effective and help us remain competitive in the long term. Today marks the start of our journey to bring the Volkswagen Group Target Picture 2030 to reality.

Speaker #2: Car manufacturers. But we see ourselves well prepared. First of all, we have a great product momentum. Order intake is increasing. Both on ICE and BEVs.

Speaker #3: Seventh, leadership and culture. We will foster an even stronger performance culture. The changes we have implemented since the capital markets day in June 2023 demonstrate.

Speaker #2: We are by far market leader. For both. And the new products we kicked off three years ago are now entering into the market. The Polo and the Royal is one example.

Speaker #3: Fewer hierarchy levels, and effective lean management structures with clear responsibility and a targeted, integrated incentive system. These are our two key drivers for change. We will build on this.

Speaker #2: But others also in the BEV segment. And Arno mentioned also the product momentum at Audi with S and RS models. So on first, we are counting on our own strengths.

Speaker #3: And eighth, group governance. Clear decision-making structures streamline processes, and greater accountability at all levels will make our company more effective and help us remain competitive in the long term.

Oliver Blume: First, we are counting on our own strengths, while keeping with our cost initiatives, to have at the end more profit with our products. Second approach is what we will check is what own China products could fit for the European market, especially in segments where we are not present right now. That depends at the end on tariffs, on logistic costs and so on, if we see opportunities there. Because we are now in a positive situation having own Chinese products, which are very attractive to the customers. Third approach is at the end for capacities to check if we could share capacities with Chinese partners. I'm saying this very clear.

Speaker #2: While keeping with our cost initiatives, to have at the end more profit with our products. Second approaches, what we will check is what's owned.

Speaker #3: Today marks the start of our journey to bring the Volkswagen Group target picture 2030 to reality. The good news is, thanks to all efforts implemented already since 2023, we have a very solid basis to start from.

Speaker #2: China products could fit for the European markets, especially in segments where we are not present. Right now. But that depends at the end on tariffs.

Oliver Blume: The good news is, thanks to all efforts implemented already since 2023, we have a very solid basis to start from. We have all the talent we need. We get strong support from our stakeholders. We have it in our own hands, the team has the skills, will, and the spirit to excel. The strong progress achieved with our performance programs to date makes us confident that we can now take into the next level. We will drive this step in transformation decisively and will deliver on our margin and cash ambitions in 2030 by implementing our transformation plan. As you have seen, it's from us since June 2023. We will take you with on that journey through clear priorities, measurable milestones, and regular updates on our progress.

Speaker #3: We have all the talent we need. We get strong support from our stakeholders. We have it in our own hands, and the team has the skills, will, and the spirit to excel.

Speaker #2: On logistic costs and so on. If we see opportunities there. Because we are now in a positive situation having owned Chinese products. Which are very attractive to the customers.

Speaker #2: And third approaches, at the end for capacities, to check if we could share capacities with Chinese partners. But saying this very clear, first approach is what we are doing right now in Osnabrück.

Speaker #3: The strong progress achieved with our performance programs to date makes us confident that we can now take it to the next level. We will drive this step in transformation decisively and will deliver on our margin and cash ambitions in 2030 by implementing our transformation plan.

Oliver Blume: Our first approach is what we are doing right now in Osnabrück, is being in contact with the defense industry. That's also very intelligent to solve overcapacities with this manner. On the other side, to protect or bringing more competitiveness in Europe. We have a clear position in terms of Made in Europe. Companies who make business here in Europe should have an European footprint. Yeah. Therefore, we are in contact also with the European Commission. The Made in Europe initiative making progress. So, I think this will bring the market situation and the competition in Europe to a more fair trade situation. Yeah.

Speaker #2: Is being in contact with the defense industry. That's also very intelligent. To solve overcapacities with this manner. On the other side, to protect or bringing more or equal competitiveness in Europe.

Speaker #3: And as you have seen, it's from us since June 2023, we will take you with on on that journey on that journey. Through clear priorities, measurable milestones, and regular updates, on our progress.

Speaker #2: We have a clear position in terms of made in Europe. Companies who make business here in Europe. Should have an European footprint. And therefore, we are in contact also with the European Commission.

Speaker #3: With that, I would like to hand over to Arno.

Oliver Blume: With that, I would like to hand over to Arno.

Speaker #2: Yeah, thank you, Oliver. And welcome also from my side. In 2026, geopolitical tensions have risen and the competitive environment has intensified even further. Against this backdrop, we made further progress.

Arno Antlitz: Thank you, Oliver. Welcome also from my side. In 2026, geopolitical tensions have risen, the competitive environment intensified even further. Against this backdrop, we made further progress. Order intake in Europe, the order book improved. Our cars are resonating well with our customers. Implementation of our In China, for China strategy continues with full speed. We reduced group-wide overhead costs by almost EUR 1 billion in Q1. We achieved a net cash flow of EUR 2 billion, which is quite substantial for Q1, taking into account that we had to refill the product pipelines. Despite this progress, our operating margin, even before special effects, stands at 4.3%, only reflecting the current challenges of the industry, the weak spots of our current business model.

Speaker #2: The made in Europe initiatives making progress. And so I think this will bring the market situation and the competition in Europe to a more fair trade trade situation.

Speaker #2: Order intake in Europe and the order book improved. Our cars are resonating well with our customers. Implementation of our China-for-China strategy continues with full speed.

Speaker #2: And that's also important because we are facing other regions of the world. This restrictions. And this is more a European interest policy. It's not protection.

Oliver Blume: That's also important because we are facing other regions of the world, these restrictions, and this is more a European interest policy. It's not protection, but I think we need it and so the companies who are investing in Europe can benefit.

Speaker #2: We reduced group-wide overhead costs by almost €1 billion in a quarter, and we achieved a net cash flow of €2 billion, which is quite substantial for a first quarter, taking into account that we had to refill the product pipelines.

Speaker #2: But I think we need it. And to the companies who are investing in Europe, can benefit.

Speaker #5: Okay. Great. Also as the German citizen, I keep the fingers crossed for you. That you master all these challenges. All the best.

Horst Schneider: Okay, great. Also, as the German citizen, I keep the fingers crossed for you that you master all these challenges. All the best.

Speaker #2: Despite this progress, the operating margin, even before special effects, stands at 4.3%, only reflecting the current challenges of the industry and the big spots of our current business model.

Speaker #2: Thank you. Horst. And we continue with Michael Punzet from DZ Bank. Michael, please go ahead.

Rolf Woller: Thank you, Horst. We continue with Michael Punzet from the DZ Bank. Michael, please go ahead.

Speaker #2: There is a gentleman. We bring attractive new vehicles to our customers, making technological progress and consistently delivering on figures. Make clear that these efforts are not yet sufficient to generate an adequate return and ensure a robust path into the future.

Arno Antlitz: Ladies and gentlemen, we bring attractive new vehicles to our customers, making technological progress and consistently delivering on our cost programs. Nevertheless, our financial figures make clear that these efforts are not yet sufficient to generate an adequate return and ensure a robust path into the future. Since we launched Volkswagen Zukunft program one and a half years ago, the operating environment has deteriorated significantly. US tariffs have been introduced and are weighing on our earnings by USD 4 billion annually. Pricing and competitive pressure in China has intensified further, particularly for our premium brands, Audi and Porsche. Chinese competitors are increasingly exporting this pressure to Europe. In addition, geopolitical tensions such as the conflict in the Middle East are worsening the global economic outlook. Against this backdrop, incremental cost measures will not be enough. We must fundamentally reshape our business model through structural, lasting improvements.

Speaker #3: Yes, Michael Punzet. Good morning. I have one question regarding a report of the Handelsblatt from last week. Mentioning that you have to increase your net liquidity.

Michael Punzet: Yes. Michael Punzet. Good morning. I have one question regarding a report of the Handelsblatt last week, mentioning that you have to increase your net liquidity. So far you gave us a target of roughly 10% of revenues. Can you give us any indication for the new target and maybe also the topics which you need to increase net liquidity and if this have any impact on upcoming dividend payments?

Speaker #3: So far, you gave us a target of roughly 10% of revenues. Can you give us any indication for the new target? And maybe also the topics which you need to increase net liquidity.

Speaker #2: Since we launched the Volkswagen Zukunft program one and a half years ago, the operating environment has deteriorated significantly. US tariffs have been introduced and are weighing on our earnings by $4 billion annually. Pricing and competitive pressure in China has intensified further, particularly for our premium brands Audi and Porsche.

Speaker #3: And if this has any impact on upcoming dividend payments.

Speaker #2: Yeah. Michael. Look, I will give you a little bit of color. Overall, we want to make sure that in the transformation, we have a really strong balance sheet.

Arno Antlitz: Yeah, Michael. Look, I will give you a little bit of color. Overall, we wanna make sure that in the transformation we have a really strong balance sheet and rating is really important for us. This is what. Not the only reason, but another reason why we are focused on improving our result on improving our net cash flow. Net liquidity, we said always at least 10% of revenue. If you look into the industry, others have an even stronger balance sheet. Going forward, it is clear that we want to improve our operative result and the cash conversion rate with more discipline and being more disciplined and then on R&D, that's driving also our cash conversion rate.

Speaker #2: And Chinese competitors are increasingly exporting this pressure to Europe. In addition, geopolitical tensions—such as the conflict in the Middle East—are worsening the global economic outlook.

Speaker #2: And rating is really important for us. And so this is not the only reason. But what another reason why we are focused on improving our result on improving our net cash flow.

Speaker #2: Against this backdrop, incremental cost measures will not be enough. We must fundamentally reshape our business model through structural lasting improvements. This includes a step up in cost competitiveness of our products, reduced overhead costs, improved efficiency in our plans, and higher speed both technologically wise and in terms of decision-making.

Speaker #2: So net liquidity, we said always, at least 10% of revenue. But if you look into the industry, others have an even stronger balance sheet.

Arno Antlitz: This includes a step up in cost competitiveness of our products, reduced overhead costs, improve efficiency in our plants, and higher speed, both technologically wise and in terms of decision-making. Achieving this is not possible within our current setup. To create the conditions for long-term success, we must drastically reduce complexity in terms of size, our product portfolio, number of platforms and technology stacks we run, in terms of the number of entities and layers, and the way we steer the group. We need to put the customer at the center and structurally strengthen the core of our business. Let's now turn to the operational and financial developments of the quarter, starting with deliveries to customers.

Speaker #2: And going forward, it is clear that we want to improve our operative result. And the cash conversion rate with more discipline than being more disciplined and then on R&D.

Speaker #2: Achieving this is not possible within our current setup. To create the conditions for long-term success, we must drastically reduce complexity in terms of size or product portfolio, number of platforms, and technology stacks we run, in terms of the number of entities and layers, and the way we steer the group.

Speaker #2: And that's driving also our cash conversion rate. And so although it's too early to discuss it, but let's assume we achieve that. We are rather confident, very confident that we achieve that.

Arno Antlitz: Although it's too early to discuss it, let's assume we achieve that. We are rather confident, very confident that we achieve that. It's a question, what are potential ways to use that cash flow? One net cash flow is obviously let's strengthen our net liquidity position and our balance sheet. Another possibility is, or means is, let our shareholder participate on a much stronger Volkswagen. Third, we have also hybrid bonds. We look into potentials there. This is why we said 10% of revenue is the minimum we want to keep. With a stronger Volkswagen going forward in uncertain world, we potentially also want to increase that.

Speaker #2: Then it's a question how can what are potential ways to use that cash flow. And one net cash flow is obviously that strengthen our net liquidity position and our balance sheet.

Speaker #2: We need to put the customer at the center and structurally strengthen the core of our business. These are the priorities we will execute over the coming months.

Speaker #2: Another possibility is or means is let our shareholder participate on a much stronger Volkswagen and third, we have also hybrid bonds. We look into potentials there.

Speaker #2: Let's now turn to the operational and financial developments of the quarter, starting with deliveries to customers. In the first three months of the year, deliveries to customers amounted to 2.05 million vehicles, some 4% below the prior-year period.

Arno Antlitz: In the first 3 months of the year, deliveries to customers amounted to 2.05 million vehicles, some 4% below the prior year period. Deliveries differed by region. North America declined by 13%, mainly due to US tariffs, which became effective in April 2025. In China, deliveries to customers declined by 15%, slightly less than the overall weak market. Declines in both China and North America could be partially offset by increases in South America and Europe. South America recorded growth of 7%, and in Europe, our strong momentum continued in Q1, with deliveries up 5% year-on-year. The order situation in Europe continues to be strong, thanks to the enhanced model lineup and further product momentum.

Speaker #2: And this is why we said 10% of revenue is the minimum. We want to keep. And with a stronger Volkswagen going forward in uncertain world, we potentially also want to increase that.

Speaker #2: Deliveries differed by region. North America declined by 13%, mainly due to U.S. tariffs, which became effective in April 2025. In China, deliveries to customers declined by 15%, slightly less than the overall weak market.

Speaker #5: Okay. Thank you. Maybe a short follow-up. You mentioned the sale of Bugatti Rimac. Will this have also no impact on your industrial net cash?

Michael Punzet: Okay. Thank you. Maybe a short follow-up. You mentioned the sale of Bugatti Rimac. Will this have also no impact on your industrial net cash and all this stuff, or will you have a different accounting compared with Porsche?

Speaker #5: And all this stuff? Or would you have a different accounting compared with Porsche?

Speaker #2: No, no. That will also strengthen our balance sheet. Because Porsche is fully consolidated in the group.

Arno Antlitz: No, no. That will also strengthen our balance sheet because Porsche is fully consolidated in the Group.

Speaker #2: The order situation in Europe continues to be strong thanks to the enhanced model lineup and further product momentum. In the first three months of the year, order intake increased by 3% to 1.1 million vehicles, driven by increases across all brands.

Speaker #5: No. I mean, yesterday, Porsche said that book gain and also the cash inflow from that deal will not have any impact on the automotive division.

Michael Punzet: No, I mean, yesterday Porsche said that the book gain and also the cash inflow from that deal will not have any impact on the automotive division. Is it the same as at your level?

Speaker #5: Is that the same as at your level?

Speaker #2: And as a result, the total order book in Europe grew by 15% compared to year-end 2025, to about 1.1 million vehicles. This corresponds to an order reach of more than three months.

Arno Antlitz: This positive effect on a cash flow at Porsche will be, since we are fully consolidated, also positive net cash flow on group level.

Speaker #2: This positive effect on the net cash flow at Porsche will be since we are fully consolidated, also positive net cash flow on group level.

Speaker #5: Okay.

Michael Punzet: Okay.

Speaker #2: Thank you, Michael. And we continue with Christian Frenes from Goldman Sachs. Christian, please go ahead.

Speaker #2: Global deliveries of battery electric vehicles were down 8% year to date, to 200,000 units, on lower demand in China and the US. Our BEV share stands at 10%, some 40 basis points below the prior year level.

Rolf Woller: Thank you, Michael. We continue with Christian Frenes from Goldman Sachs. Christian, please go ahead.

Christian Frenes: Goldman Sachs. Most of my questions have been answered. I have a question on pricing. Your pricing for passenger cars and light commercial vehicles was up in the quarter. Could we look into that a little bit more, specifically within EU pricing, given emerging Chinese OEMs localization efforts, and you mentioned, I think, the minimum pricing discussions between the EU and China. How do you expect, you know, pricing to evolve throughout the rest of the year in this year? What impact do you think the minimum pricing discussions will have on that?

Speaker #6: Goldman Sachs. Most of my questions have been answered. Just I'd have a question on pricing. Your pricing for passenger cars and light commercial vehicles was up in the quarter.

Speaker #2: BEV deliveries in Europe saw robust demand and increased by 12%. The corresponding BEV share expanded year-on-year to 18.1%. Škoda Elroq continued to ramp up extremely successfully, with around 30,000 vehicles delivered in the first quarter.

Speaker #6: Could we look into that a little bit more? Especifically within EU pricing. Given emerging Chinese OEMs, localization efforts, and you mentioned, I think, the minimum pricing discussions between the EU and China.

Arno Antlitz: Škoda Elroq continued to ramp up extremely successfully, with around 30,000 vehicles delivered in Q1, underlining strong customer demand in the fast-growing, compact battery electric vehicle segment. With that, let's move on to the financial and the operating performance of the Volkswagen Group in Q1. Vehicle sales came in at 2 million units, down 7% year on year or by 2% excluding the China JVs. Group sales revenue declined by 2% to EUR 75.7 billion. The lower vehicle sales were partially compensated by strong growth in the financial services business. Operating result came in 14% lower year on year at EUR 2.5 billion, corresponding to a margin of 3.3%. Our continued product offensive across all brands as well as centered cost work continue to pay off in our earnings.

Speaker #2: Underlining strong customer demand in the fast-growing compact battery electric vehicle segment. With that, let's move on to the financial and operating performance of the Volkswagen Group in the first quarter.

Speaker #6: How do you expect pricing to evolve throughout the rest of the year in 20 in this year? And what impact do you think the minimum pricing discussions will have on that?

Speaker #2: Vehicle sales came in at 2 million units, down 7% year on year, or by 2% excluding the China JVs. Group sales revenue declined by 2% to €75.7 billion. The lower vehicle sales were partially compensated by strong growth in the Financial Services business.

Speaker #6: And then secondly, just also sticking with pricing, looking at China, thanks for your capital markets day event. And we just had the Beijing Motor Show where we saw a lot of the impressive product you have coming.

Christian Frenes: Secondly, just also sticking with pricing, looking at China, thanks for your Capital Markets Day event, and we just had the Beijing Motor Show, where we saw a lot of the impressive product you have coming, and also your strategy and targets. Could you comment a little bit about your expectations for China pricing again for the remainder of the year this year? Thank you.

Speaker #6: And also your strategy and targets. But could you comment a little bit about your expectations for China pricing again for the remainder of the year this year?

Speaker #2: Operating result came in 14% lower year-on-year at €2.5 billion, corresponding to a margin of 3.3%. Our continued product offensive across all brands, as well as stringent cost control, will continue to pay off in our earnings.

Speaker #6: Thank you.

Speaker #2: Yeah. Thanks for the question. Obviously, what we cannot make that public discussions on what prices we plan and what we expect. What we can say and what we prepare for, the competition is clearly increasing.

Arno Antlitz: Yeah. Thanks for the question. Obviously, what cannot make that public, discussions on what prices we plan and what we expect. What we can say and what we prepare for, the competition is clearly increasing. You know, Chinese competitors are bringing their cars to Europe, and they're also basically exporting the competitive pressure to Europe. What we see in our EBIT bridge, we saw pretty strong movement based on our really good product substance and our portfolio. You saw pricing was even slightly positive in Q1 with EUR 0.2 billion. Of course, we have to take into account the negative mix basically, from the ramp-up of the BEVs.

Speaker #2: The results decline is mainly due to special effects amounting to €800 million, or about 100 basis points margin, specifically at brand Volkswagen and at Traton.

Arno Antlitz: The results declines mainly due to special effects amounting to EUR 800 million or about 100 basis points margin, specifically at Brand Volkswagen and at Traton. EUR 0.5 billion have been booked related to the announced end of the production of the ID.4 in Chattanooga. Around EUR 0.3 billion were incurred by restructuring measures at Traton as well as to a smaller extent, Brand Group Core. In addition, Traton booked an impairment related to the stop of an individual battery project. Excluding the effects, the Q1 operating margin would have amounted to 4.3%, corresponding to the lower half of our full year outlook range. Net cash flow in the Automotive division came in rather strong and totaled EUR 2 billion in Q1 2026 compared to -EUR 800 million in the prior year quarter.

Speaker #2: Chinese competitors are bringing their cars to Europe. And they're also basically exporting the competitive pressure to Europe. What we see in our EBIT bridge, we saw pretty strong movement based on our really good product substance.

Speaker #2: And our portfolio you saw pricing was even slightly positive in the first quarter with 0.2 billion. Of course, we have to take into account the negative mix.

Speaker #2: Basically, from the ramp-up of the VVs in total we expect more pressure. But this is also why we compensate on the cost side on in order to be prepared.

Speaker #2: And cash flow and amount of division came in rather strong and totaled €2 billion in Q1 2026 compared to minus €800 million in the prior year quarter.

Arno Antlitz: In total, we expect more pressure. This is also why we compensate on the cost side in order to be prepared on the cost level. Now we have great products, we have good technology, and we have to have the competitive cost base. This is what we work on.

Speaker #2: Gross cash flow improved by €2.2 billion year on year, mainly due to the operating performance before special items and about €1.1 billion lower tax payments in the quarter.

Arno Antlitz: Gross cash flow improved by 2.2 billion year-on-year, mainly due to the operating performance before special items and about EUR 1.1 billion lower tax payments in the quarter. Investments in CapEx and R&D were largely unchanged, and in the absence of further M&A, we recorded a cash inflow of EUR 0.2 billion related to the sale of a stake in Sinotruk by Traton. Working capital movements at EUR -0.9 billion were a slight headwind in Q1, but on a similar level as in Q1 last year. This development clearly confirms the sustainability of working capital measures implemented in particularly in H2 of last year. Automotive net liquidity came in at EUR 34.2 billion at the end of March, almost on par with the year-end 2025 number and on a solid level.

Speaker #2: On the cost level. We have great products. We have good technology. And we have to have the committed cost base and this is what we work on.

Speaker #6: Yeah. And maybe to China, we have seen during the last two years an average decline of 15% of pricing. And we don't expect that the pricing level will come back where it has been years ago.

Speaker #2: Investments in CapEx and R&D were largely unchanged, and in the absence of further M&A, we recorded a cash inflow of €0.2 billion related to the sale of a stake in Sinotruck by Traton.

Oliver Blume: Yeah. Maybe to China, we have seen during the last two years an average decline of 15% of pricing. We don't expect that the pricing level will come back to where it has been years ago. Margin improvement will come only over tough cost work. Yeah. This process has already been kicked off. We have shown you a cost improvement of 40% to 50% depending on our platforms in China, and we will continue to do so. Yeah. The same what we are doing there is our task in Europe to being more competitive in terms of pricing while having the opportunity and improving margin.

Speaker #2: Working capital movements at minus €0.9 billion were a slight headwind in the first quarter, but on a similar level as in Q1 last year.

Speaker #6: So margin improvement will come only over tough cost work. And this process has already been kicked off. We have shown you an cost improvement of 40 to 50% depending on our platforms in China.

Speaker #2: This development clearly confirms the sustainability of working capital measures implemented, particularly in the second half of last year. Automotive net liquidity came in at €34.2 billion at the end of March, almost on par with the year-end 2025 number, and at a solid level.

Speaker #6: And we will continue to do so. And the same what we are doing there. Is our task in Europe. To being more competitive in terms of pricing.

Speaker #2: Net cash flow of €2 billion more than compensated for the net liquidity outflow from the redemption of a hybrid bond with a nominal value of €1.75 billion.

Arno Antlitz: Net cash flow of EUR 2 billion more than compensated for the net liquidity outflow from the redemption of a hybrid bond with a nominal value of EUR 1.75 billion. Moving on to the performance of the divisions. Passenger cars recorded an operating result of EUR 0.3 billion in Q1 2026, 43% above prior year period. The margin amounted to 4.1%, up by 1.3 percentage points. Commercial vehicles saw a decline to EUR 40 million, corresponding to an operating margin of only 0.4% to a vast majority driven by special effects. The Financial Services division came in almost on par with last year's level, with an operating result of EUR 1 billion. Coming to the EBIT bridge, volume price mix had a slightly negative impact of EUR 0.2 billion.

Speaker #6: While having the opportunity and improving margin. And then maybe as a quick follow-up, not much is being said about your supply chain or Middle East and that's in line with the rest of the industry, I would add.

Christian Frenes: Maybe as a quick follow-up, not much is being said about your supply chain or Middle East, and that's in line with the rest of the industry, I would add. When would you expect to have more clarity on 2027 regarding these issues? Thank you.

Speaker #2: Moving on to the performance of the division's passenger cars, recorded an operating result of €0.3 billion in the first three months of 2026, 43% above the prior-year period.

Speaker #6: But if you when would you expect to have more clarity on 2027 regarding these issues? Thank you.

Speaker #2: The margin amounted to 4.1%, up by 1.3 percentage points. Commercial vehicles saw a decline to 40 million, corresponding to an operating margin of only 0.4%, due to a vast majority driven by special effects.

Speaker #2: Yeah. Today, our supply chain is not affected. And also in terms of raw materials, for example, we have hatching. What would it mean for 2027 is too early to predict.

Oliver Blume: Yeah. Today, our supply chain is not affected. Also in terms of raw materials, for example, remember all we have hedging. What would it mean for 2027 is too early to predict. Depends on the conflict. We don't know what will happen. But for 2026, you can be for sure that we won't be affected in terms of cost.

Speaker #2: The financial services division came in almost on par with last year's level, with an operating result of €1 billion. Coming to the EBIT bridge, volume price mix had a slightly negative impact of €0.2 billion; positive pricing partially compensated for negative mix effects.

Speaker #2: Depends on the conflict. And we don't know what will happen. But for 2026, you can be for sure that we won't be affected. In terms of cost.

Arno Antlitz: Positive pricing partially compensated for negative mix effects. Same trade movement posed a tailwind of EUR 0.4 billion. Borrow costs were largely flat year-on-year. Last but not least, fixed costs and others had a +EUR 0.8 billion effect, with overhead cost re-reduction being the biggest contributor. This is also visible when taking a more detailed look at the overhead cost development. In the first three months of the year, overhead costs in the Automotive Division have been reduced by EUR 0.9 billion. According, the overhead cost ratio improved by 70 basis points, which is quite significant. This overhead cost reduction was largely driven by the consequent implementation of restructuring measures. In the first three months of 2026, Volkswagen AG reduced the number of active employees, both in the indirect and direct area, at its German sites by another round 1,000.

Speaker #2: Exchange rate movements posted a tailwind of €0.4 billion. Broader costs were largely flat year on year. And last but not least, fixed costs and others had a positive effect of €0.8 billion, with overhead costs reduction being the biggest contributor.

Speaker #6: Thank you.

Rolf Woller: Thank you.

Speaker #7: Thank you, Christian. Brings us to the next question which comes to from Frank Biller from ABBW. Frank, please go ahead.

Arno Antlitz: Thank you, Christian. Brings us to the next question, which comes to from Frank Biller from LBBW. Frank, please go ahead.

Frank Biller: Yes, hello. Frank Biller from LBBW. Thanks for taking my question. It's about a possible divestments, thinking about Europcar stake, or a floating of Traton. Are you also thinking of divest of maybe Ducati or Lamborghini IPO?

Speaker #8: Yes. Hello, Frank Biller from ABBW. Thanks for taking my question. It's about a possible divestment. Thinking about Avalanche stake or floating of Triton or are you also thinking of a divesture of maybe Ducati or Lamborghini IPO?

Speaker #2: According to the overhead cost ratio, improved by 70 basis points, which is quite significant. This overhead cost reduction was largely driven by the consequent implementation of restructuring measures.

Arno Antlitz: No. We were very transparent about our plans for Europcar, and we are pretty confident that this is a really very good process and it's progressing well. In Traton, we always said we don't rule out the next step. We want to increase the free float. We made the first step.

Speaker #2: No. We were very transparent about our plans for Avalanche. And we are pretty confident that this is really a very good process. And it's progressing well.

Speaker #2: In Triton, we always said we don't rule out the next step. We want to increase the fleet float. We made the first step. Also, Triton made some steps for example, in terms of Sinotruck.

Speaker #2: In the first three months of 2026, Volkswagen AG reduced the number of active employees, both in the indirect and direct areas, at its German sites by another approximately 1,000.

Frank Biller: Right

Arno Antlitz: ... made some steps, for example, in terms of Sinotruk. These are the topics we decided on so far. We look at various alternatives for PowerCo. We open our capital structure there. Frank, please have understanding for that. We can only talk about topics like this once we have decided on.

Speaker #2: Overall, since the end of 2023, headcount was reduced by approximately 15,000. In addition, Audi, Porsche, and CARIAD are pushing ahead with their respective programs.

Speaker #2: But these are the topics we decided on so far. We look at various alternatives for PowerCo. We open our capital. Structure there. But Frank, please have understanding for that.

Speaker #2: As a result, headcount in Germany on group level has been reduced by a total of 3,000 in the first three months, or 18,000 in a bit more than two years' time.

Speaker #2: We can only talk about topics like this once we have decided on.

Speaker #2: And group-wide restructuring resulted in a reduction of 29,000 headcount since 2023. Let's now turn to the development of the Brand Group's platforms and the Financial Services business.

Speaker #6: But there is a clear intention. It's part of our program for the next steps of transformation. To reorder our investment portfolio. That's very clear.

Oliver Blume: There is a clear intention, and that's part of our program for the next steps of transformation to reorder our investment portfolio. That's very clear to reduce complexity. That's, for example, why we kicked off last year the Bugatti deal at Porsche. That's one example. Many others we are working currently, but we won't go into details and speculations in terms of Ducati and Lamborghini. The activities are placed and we have clear priorities what we will take first and then step to step by step. Overall, reducing complexity is our goal.

Speaker #6: To reduce complexity. And that's, for example, why we kicked off last year the Bugatti deal at Porsche. That's one example. Many others we are working currently.

Speaker #2: Within the passenger car segment, Brand Group Core recorded sales revenue almost on par with last year's Q1. Operating result came in at €0.5 billion, €1.5 billion, 38% higher than in the prior year period.

Speaker #6: But we won't go into details. And speculations in terms of Ducati and Lamborghini. But the activities are placed. And we have clear priorities. What we will tackle first.

Speaker #2: Despite the significant effect related to the end of the ID.4 production in the US of €0.5 billion, the margin stands at 4.4%. I will provide some more detail on Brand Group Core in a minute.

Arno Antlitz: of EUR 0.5 billion. The margin stands at 4.4%. I will provide some more detail on Brand Group Core in a minute. Brand Group Progressive saw sales decline by 6%, while sales revenue were flat. EBIT increased by 10% to EUR 0.6 billion compared to a prior year quarter that has been impacted by costs related to U.S. emissions regulation and restructuring charges. Porsche automotive business delivered an operating result of EUR 0.5 billion, corresponding to a margin of 7%. This was driven by a significant improvement in mix from higher volumes of 911, offsetting volume headwinds in China and the U.S. Let's have a look at the brands of the Brand Group Core. The operating result was largely driven by Škoda and the component business.

Speaker #6: And then step by step. But overall, reducing complexity is our goal.

Speaker #2: Brand Group Progressive saw sales decline by 6%, while sales revenue was flat. EBIT increased by 10% to €0.6 billion, compared to the prior-year quarter that had been impacted by costs related to US emissions regulation and restructuring charges.

Arno Antlitz: It is a good point. We always talk about Ducati and Lamborghini, these brands. We have 1,500 entities that we have in our books, fully consolidated and not fully consolidated. So we need to reduce that complexity. We have so many layers. We have a lot of entities, and we need to reduce that complexity in order to achieve the cost savings that we need to achieve in order to be competitive.

Speaker #7: That's a good point. We always talk about Ducati and Lamborghini. These brands. We have 1,500 entities that we have in our books. Fully consolidated.

Speaker #7: And not fully consolidated. And so we need to reduce that complexity. We have so many layers. We have a lot of entities. And we need to reduce that complexity in order to achieve the cost savings.

Speaker #2: Porsche Automotive business delivered an operating result of €0.5 billion, corresponding to a margin of 7%. This was driven by a significant improvement in mix from higher volumes of 911, offsetting volume headwinds in China and the US.

Speaker #7: That we need to achieve in order to be competitive.

Speaker #2: Let's have a look at the brands of the Brand Group Core. The operative result was largely driven by Škoda and the component business. Volkswagen Passenger Cars recorded a decline in profitability by 20 basis points to 0.4%, mainly due to the costs related to the ID.4 production stop in the US, as well as significant headwinds from US tariffs.

Speaker #8: Yeah. Thank you.

Frank Biller: Yeah. Thank you.

Speaker #7: Thank you, Frank. And we move on to Stephen Reitman. Stephen, please go ahead.

Arno Antlitz: Thank you, Frank. We move on to Stephen Reitman from-

Arno Antlitz: Volkswagen passenger cars recorded a decline in profitability by 20 basis points to 0.4%, mainly due to the costs related to the ID.4 production stop in the U.S., as well as significant headwinds from U.S. tariffs. Škoda continued their impressive earnings trajectory and improved operating margin by 80 basis points to a remarkable value of 8.3%. Excluding the non-operational effect, the financial performance of Volkswagen brand and Brand Group Core are decent. Before effects of EUR 0.5 billion from the ID.4 production stop at Chattanooga, Volkswagen reported a margin of 3.3%. This is slightly below the margin target of 4% that the brand has set itself for the full year 2026.

Rolf Woller: Move on to Stephen Reitman from Bernstein.

Arno Antlitz: Stephen, please go ahead.

Speaker #9: Yes. Good morning. In the final spot interview, the article last week, there was also talk about reducing factor costs. Which I think was said to be about 4,500 euros at the moment.

Stephen Reitman: Good morning. In the Handelsblatt interview article last week, there was also talk about reducing factor costs, which I think was said to be about 4,500 EUR at the moment, and you want to reduce that to 3,000 EUR in Europe. Could you comment on what the situation looks when you compare plants across Europe and how that also then compare to the situation in China and in other locations? Just give us some kind of rough feel for that. Thank you.

Speaker #9: And you want to reduce that to 3,000 euros. In Europe, could you comment on what the situation looks when you compare plans across Europe?

Speaker #9: And how that also then compares to the situation in China? And in other locations? Just give us some kind of rough feel for that.

Speaker #2: Before the effects of the €0.5 billion from the ID.4 production stop at Chattanooga, Volkswagen reported a margin of 3.3%. This is slightly below the margin target of 4% that the brand has set itself for the full year 2026.

Speaker #9: Thank you.

Speaker #2: Yeah. First of all, that hasn't been an interview in 100+. But talking about the figures, that's a direction we want to go to. And we are very confident that we have turned to the right direction right now.

Oliver Blume: First of all, that hasn't been an interview in Handelsblatt. Talking about the figures, that's the direction we want to go to. We are very confident that we have turned to the right direction right now. Now, the first results, having reduced our plant cost in Germany over 20% last year. That's massive. Now, we haven't achieved this over the last 10 or 20 years. This in 1 year, 20%. That's not the end. Today we can say that our plants in Eastern and in Western Europe are competitive to all the others are acting in Europe.

Speaker #2: And a reminder that we must continue to rigorously implement the measures agreed under Volkswagen Zukunft, agreement, and intensify speed and magnitude of the restructuring programs.

Arno Antlitz: A reminder that we must continue to rigorously implement the measures agreed under Zukunft Volkswagen and intensify speed and magnitude of the restructuring programs. Backed by increasing volumes, CARIAD recorded sales revenue of EUR 0.4 billion, up 64% year-on-year. Operating loss was reduced to EUR -0.4 billion, benefiting from the implementation of restructuring measures and higher volumes. PowerCo kept operating results at a stable level despite the ongoing ramp-up of cell production at the Salzgitter plant and intensifying construction works at the Valencia and St. Thomas plant. TRATON recorded a slow start to the year, driven by lower unit sales, in particular in South America and North America. Sales in Europe were up and order trends in the region remain promising. Mainly as a result of lower volume, sales revenue declined by 5% to EUR 9.8 billion.

Speaker #2: The first results I'm having reduced our planned cost in Germany over 20% last last year. That's massive. We haven't achieved this over the last 10 or 20 years.

Speaker #2: Backed by increasing volumes, Carriot recorded sales revenue of €0.4 billion, up 64% year on year. Operating loss was reduced to minus €0.4 billion, benefiting from the implementation of restructuring measures and higher volumes.

Speaker #2: And this in one year. 20%. And that's not the end. Today, we can say that our plans in Eastern and then Western Europe are competitive.

Speaker #2: PowerCo kept operating results at a stable level despite the ongoing ramp-up of cell production at the Salzgitter plant and intensifying construction works at the Valencia and St. Thomas sites.

Speaker #2: To all the others, are acting in Europe. And therefore, we decided, for example, to bundle our urban car family in Spain and the ID.1 to come in Portugal.

Speaker #2: Thomas Plant: TRATON recorded a slow start to the year, driven by lower unit sales, in particular in South America and North America. Sales in Europe were up, and order trends in the region remain promising. Mainly as a result of lower volumes, sales revenue declined by 5% to €9.8 billion. Operating result came in at €40 million, significantly below the prior year quarter.

Oliver Blume: Therefore, we decided, for example, to bundle our urban car family in Spain and the ID.1 to come in Portugal, on a very competitive plant level. In Germany, we still have work ahead, but also very clear measures to reduce. A plant cost level per car of around EUR 3,000 is a feasible level comparing to the competition. In China, the level of plant cost is even lower. That's clear because of labor costs and energy and everything around. This you can't compare with Europe. For us, it's important to compare our situation in the different regions of the world, and there we can confirm in Europe already, Western and Eastern, on competitive level.

Speaker #2: On a very competitive plant level. In Germany, we still have our work ahead. But also very clear measures to reduce and so a planned cost level per car of around 3,000 euros is a feasible level comparing to the competition.

Arno Antlitz: Operating result came in at EUR 40 million, significantly below the prior year quarter. Lower volumes, US tariff costs, foreign currency effects, and special effects mainly related to the adjustment to the electric mobility projects, the sale of Springfield site, and the EU truck case negatively impacted results. Our financial services business delivered a solid performance in the period under review, supported by improved contract volume, specifically in Europe. The credit loss ratio continues to be on a solid level. Operating result at EUR 1 billion was almost on par with the prior year level. Investment spend for CapEx and R&D in the automotive division was slightly lower in the quarter by EUR 0.2 billion to EUR 7.5 billion in the first 3 months of the year. The invest ratio stood at 11.3%, largely unchanged year-over-year.

Speaker #2: Lower volumes, U.S. tariff costs, foreign currency effects, and special effects—mainly related to the adjustment to the electric mobility projects, the sale of the Springfield site, and the EU truck case—negatively impacted results.

Speaker #2: In China, they level of planned cost is even lower. That's clear. Because of labor cost and energy and everything around. But this you can't compare with Europe.

Speaker #2: Our financial services business delivered a solid performance in the period, with revenue supported by improved contract volume, specifically in Europe. The credit loss ratio continues to be at a solid level.

Speaker #2: And for us, it's important to compare our situation in the different regions of the world. And there, we can confirm in Europe already Western and Eastern on competitive level.

Speaker #2: Operating result at 1 billion euro was almost on par with the prior year level. Investment spend for CapEx and R&D in the automotive division was slightly lower in the quarter by 0.2 billion euro to 7.5 billion in the first three months of the year.

Speaker #2: In Germany, still work to do. On China, completely on a competitive level. And where we have also strong footprint in South America, we are working on a competitive level.

Oliver Blume: In Germany, still, work to do. On China, completely on a competitive level. Where we have also strong footprint, in South America, we are working on a competitive level. Yeah. That's what we have to do. The 3,000, which was written there is an average, like a goal to go to.

Speaker #2: The invest ratio stood at 11.3%, largely unchanged year over year. We remain fully committed to sustainably reducing investment spend in the years to come.

Speaker #2: And that's what we have to do. And the 3,000, which was written there, is an average like a goal to go to.

Arno Antlitz: We remain fully committed to sustainably reducing investment spend in the years to come. Moving on to the performance of our China joint ventures. In an overall weak market and continued high competitive pressure, specifically in premium, unit sales were 90% lower year-on-year at 0.5 million vehicles. At the same time, Volkswagen Group China is launching its unprecedented model offensive, which is burdening results now, and we expect contributions from Q3 onwards. As a result, and as expected, the proportionate operating result of our joint ventures in China came in at EUR 83 million in Q1 2026. We confirm the bandwidth for proportionate operating result for the full year and continue to expect an operational and financial turnaround in fiscal year 2027. This brings me to the full-year outlook, which we confirm today.

Arno Antlitz: We just got a question, a follow-up question on my remark on the number of entities and layers. I must confirm, we are 100% convinced that we are the best owner of Lamborghini. Lamborghini is an integral part of Brand Group Progressive. There's a lot of synergies between the three brands there. That's not hopefully, you didn't kind of got it wrong. We clearly stick to the current setup in the Brand Group Progressive, including Lamborghini right now.

Speaker #7: I just got a question. A follow-up question on my remark on the number of entities and layers. And I must confirm we are 100% convinced that we are the best owner of Lamborghini.

Speaker #2: Moving on to the performance of our China joint ventures, in an overall weak market and continued high competitive pressure—specifically in premium—unit sales were 90% lower year on year, at 0.5 million vehicles. At the same time, Volkswagen Group China is launching its unprecedented model offensive, which is burdening results now, and we expect contributions from Q3 onwards.

Speaker #7: Lamborghini is an integral part of brand group Progressive. There's a lot of synergies between the three brands there. And so let's not hopefully, it didn't get it wrong.

Speaker #2: As a result, and as expected, the proportion of operating result of our joint ventures in China came in at 83 million euro in the first quarter of 2026.

Speaker #7: So we clearly stick to the current setup in the brand group Progressive including Lamborghini right now.

Speaker #2: We confirm the bandwidth for proportional operative result for the full year and continue to expect an operational and financial turnaround in fiscal year 2027.

Speaker #9: Thank you, Arno, for that clarification. There is we have Henning Cosman from Barclays, actually, who has difficulties with asking the question. So he wrote me an email and two questions.

Rolf Woller: Thank you, Arno, for that clarification. We have Henning Cosman from Barclays, actually, with difficulties asking the question. He wrote me an email and two questions. One is on, I think, Oli, can you update us on US localization? Is there a chance that localization would take Scout into considerations? If we would localize, would that be compensated within the EUR 160 billion investment budget for 2026 to 2030, so in the current planning round? The second question is for Arno, update on Everlance. There are obviously shortlisted PE names, if you would like to comment on that, and capital allocation from proceeds of the potential sale of Everlance.

Speaker #2: This brings me to the full-year outlook, which we confirmed today. Continue to expect the operating return on sales in the bandwidth between 4 and 5.5%, building on the strong start to the year.

Arno Antlitz: Continue to expect the operating return on sales in a bandwidth between 4% and 5.5%. Building on the strong start to the year, we continue to expect automotive net cash flow to the range between EUR 3 billion and EUR 6 billion. Ladies and gentlemen, six strategic fields will determine the success of our strategy. The ramp-up of electric vehicles, software, China and North America, robust operating margins in a low-growth environment, capital efficiency and cash conversion, and a lean governance and reduced complexity. For most of these action fields, we have developed comprehensive plans that now must be implemented consistently and with strict discipline. At the same time, the economic environment has changed significantly. Since the launch of the Zukunft Volkswagen program, which was designed to achieve a sustainable margin for Volkswagen brand, the world has changed dramatically.

Speaker #9: One is on I think Oli can you update us on US localization? Is there a chance that localization would take Scout into considerations? And if we would localize, would that be compensated within the 160 billion investment budget for 2026 to 2030?

Speaker #2: We continue to expect automotive net cash flow to be in the range between $3 and $6 billion, ladies and gentlemen. Six strategic fields will determine the success of our strategy.

Speaker #2: The ramp-up of electric vehicles, software, China and North America, robust operating margins in a low-growth environment, capital efficiency, and cash conversion, and the lean governance and reduced complexity.

Speaker #9: So in the current planning round. And the second question is for Arno. Update on Avalanche. There are obviously shortlisted PE names. If you would like to comment on that.

Speaker #2: For most of these action fields, we have developed comprehensive plans that now must be implemented consistently and with strict discipline. At the same time, the economic environment has changed significantly.

Speaker #9: And Capital Allocation from Proceeds of the potential sale of Avalanche. If this is still true that this is in line with our current dividend policy.

Rolf Woller: If this is still true, that this is in line with our current dividend policy, and if the potential proceeds are included in the cash flow forecast.

Speaker #2: Since the launch of the Volkswagen Zukunft program, which was designed to achieve a sustainable margin for the Volkswagen brand, the world has changed dramatically.

Speaker #9: And if the potential Proceeds are included in the cash flow forecast.

Speaker #2: In this environment, it's not enough to just incrementally increase cost measures. We need to fundamentally change our business model with a step-up of structural and lasting improvements.

Arno Antlitz: In this environment, it's not enough to just incrementally increase cost measures. We need to fundamentally change our business model with a step-up of structural and lasting improvement in terms of cost competitiveness of our product, in terms of overhead cost reduction and efficiency improvements in our plants, and in terms of speed. To be able to achieve this, we must significantly reduce complexity of our business model. These are the priorities we will address with determination over the coming months. Thank you very much, and with that, I hand back to Rolf.

Speaker #2: Yeah. Let me start with the first question in terms of US localization. With the Scout plant, we have great opportunities. Making good progress. We are in line with our milestones.

Oliver Blume: Yeah. Let me start with the first question in terms of US localization. With the Scout plant, we have great opportunities, making good progress. We are in line with our milestones, and the capacity also provides opportunities for other brands of Volkswagen Group. We are not at the point today to communicate what are the concrete plans. In terms of more capacities in the US, we are still in contact with different states. At the end, this depends in terms also support we are getting there, and there stick to my position.

Speaker #2: In terms of cost competitiveness of our products, in terms of overhead cost reduction and efficiency improvements in our plants, and in terms of speed.

Speaker #2: And the capacity also provides opportunities for other brands of Volkswagen Group. And but we are not at the point today to communicate what are the concrete plans.

Speaker #2: To be able to achieve this, we must significantly reduce the complexity of our business model. These are the priorities we will address with determination over the coming months.

Speaker #2: Thank you very much, and with that, I hand back to Rolf. Thank you, Ollie. Thank you, Arno, for the concise presentation. Before we move to the Q&A, let me give you some instructions.

Speaker #2: In terms of more capacities, in the US, we are still in contact with different states. But at the end, this depends in terms also support.

Speaker #2: You should be dialed in to the conference call in order to raise a question. It will not work if you're dialed in via webcast. If you want to raise a question, you must press star one, and after that, another one.

Speaker #2: We are getting there. And there are stick to my position. We can't do both paying high tariffs on the one hand side and on the other side heavily invest in new capacities.

Oliver Blume: We can't do both, paying high tariffs on the one hand side and on the other side, heavily invest in new capacities. There are some states interested in our investment, but at the end, the balance in between support and investment is important. We plan step by step. First, now ramping up the Scout capacities, maybe using them for other brands of Volkswagen Group and then thinking to the next step. Our goal is clear to improve the local footprint in the US, having the US as a opportunity market for the future.

Speaker #2: And so there are some states interested. And in our investment. But at the end, the balance in between support and investment is important. And so we plan step by step, first now ramping up the Scout capacities.

Speaker #2: And to withdraw the question, you do the same procedure. Let me briefly highlight the next events where you can follow us. We will continue on June 10th with our ESG conference.

Speaker #2: There will be the annual shareholders' meeting on June 18th, and then the H1 call on July 24th. And with that, I would like to move on to the Q&A session.

Speaker #2: Maybe using them for other brands of Volkswagen Group. And then thinking to the next step. But our goal is clear. To improve the local footprint in the US.

Rolf Woller: With that, I would like to move on to the Q&A session and see here the first question coming from Tim Rokossa from Deutsche Bank. Tim, please go ahead with your question.

Speaker #2: And see here, the first question coming from Tim Rokasa from Deutsche Bank. Tim, please go ahead with your question.

Speaker #2: Having the US as a opportunity market for the future.

Speaker #7: And regarding Avalanche, just to say this is a great company with strong position in the market convincing strategy. And in consequence, the interest is very strong.

Arno Antlitz: Regarding Everlance, needless to say, this is a great company with a strong position in the market, convincing strategy, and in consequence, the interest is very strong. I obviously cannot comment on specific steps of the process. What we said, we wanna sell the majority, and the process is very well underway. The potential proceeds are not included in the cash flow. This is what we always made very clear, and please also have understanding.

Speaker #7: I obviously cannot comment on specific steps of the process. What we said, we want to sell the majority and the process is very well underway.

Speaker #3: The target program—very interesting to see, and much needed with the Chinese OEMs coming to Europe, tariffs, etc. It's also good to learn about it here first and not from the media.

Tim Rokossa: Target program. Very interesting to see that. Much needed with the Chinese OEM coming to Europe, tariff CTC. It's also good to learn about here first and not the media. Now, obviously, we want to know what all of this will cost you. We want to know what it brings you. I suspect you're not yet ready to say that. Let me ask in a different way. Do you expect a material net EBIT improvement from this program, from the levels that you are at right now? Is it just barely enough to counter the headwinds that we're seeing in the market? Given it says, again, reduce the number of variants, and I've heard this many, many times over the 18 years I cover you guys now from VW. Can you give examples for how much you see on that side being possible?

Speaker #3: Now, obviously, we want to know what all of this will cost you. We want to know what it brings you. And I suspect you're not yet ready to say that.

Speaker #7: The potential process are not included in the cash flow. This is what we always made very clear. And please also have understanding that we decide on the dividend towards the end of the year, taking all the factors into account and this is then decided on by the group board and management and supervisory board and this is too early to commit on now.

Speaker #3: So let me ask in a different way. Do you expect the material net EBIT improvement from this program, from the levels that you are at right now, or is it just merely enough to counter the headwinds that we're seeing in the market?

Rolf Woller: That we decide on a dividend, towards the end of the year, taking all the factors into account. This is then decided on by the group board and management and supervisory board. This is too early to commit on now specificities on the dividend. Thank you, Arno and Henning, I hope this has answered all your questions. Coming to the last, best for last, it would be Harald from Citi. Harald, please go ahead. Let me bring you up on stage. Now we should.

Speaker #3: And given it says again, reduce the number of variants, and I've heard this many, many times over the 18 years I cover you guys now from VW, can you give examples for how much you see on that side being possible?

Tim Rokossa: On the capacity side, is it fair to assume that most of this comes out of Europe? Secondly, Arno, for you, just thinking about seasonality of cash and earnings here. Free cash flow is obviously quite strong. It's helped by taxes, but also the underlying number is quite strong. Two questions. Should we expect normal seasonality in Q2 from what you can tell right now, i.e., that it should be stronger underlying on earnings compared to cash in the Q1? Since you didn't upgrade your free cash flow target now, is that just a sign of what's going on in the world with all the uncertainty, or is there any cash outs that you already foresee today that prevent you from actually printing possibly a higher than previously guided for figure? Thank you.

Speaker #7: Specificities on the dividend.

Speaker #9: Thank you, Arno. And Henning, I hope this has answered all your questions. Coming to the last, best for last, it would be Harald from Citi.

Speaker #3: It's held by taxes, but also the underlying number is quite strong. So, two questions. Should we expect normal seasonality in Q2 from what you can tell right now, i.e., that it should be stronger underlying on earnings and also cash than Q1?

Speaker #9: Harald, please go ahead. Let me bring you up on stage. And now we should.

[Analyst]: Rob, can you hear me okay?

Speaker #10: Rob, can you hear me OK?

Speaker #7: Yes, yes. Now we can.

Oliver Blume: Yes, yes. Now we can hear you.

[Analyst]: Perfect. Yeah. Slightly difficult question again, and I, you know, I don't like the short-term ones. Interesting conversation in relation to Horst question earlier with regard to IAA. The market largely ignored that. By the way, just wanted to congratulate you on the incredible work you're doing in, in what is, I think, the most challenging cycle that I have seen in this industry. As you know, I've been around probably as long as most of you. With relation to policy and IAA specifically, first question, how do you see the IAA impacting on the potential fleet sales for Chinese OEMs? How restrictive do you think the IAA Made in Europe policy might be?

Speaker #10: Perfect. Yeah. So slightly difficult question again. And I don't like the short-term ones. But interesting conversation in relation to Horst's question earlier with regard to IAA.

Speaker #10: The market's largely ignored that. And by the way, just wanted to congratulate you on the incredible work you're doing in what is, I think, the most challenging cycle that I have seen in this industry.

Speaker #3: Thank you.

Speaker #4: Yeah, Tim, good morning. And let me start with your first question in terms of improvement, in terms of EBIT. As Arno mentioned, we will keep our expectation for the year at a profit margin between 4% and 5.5%.

Oliver Blume: Yeah, Tim, good morning. Let me start with your first question in terms of improvement in terms of EBIT. As Arno mentioned, we will keep our expectation year to year on a profit margin between 4% and 5.5%. With this, we expect a net EBIT improvement. All this despite of all the headwinds we have faced geopolitically, the regulations, the market, and the expenditures and transformation. We are able because of all the work we have done during the last years. Year to year, we expect a better EBIT. In terms of models, variants, and capacities.

Speaker #10: And as you know, I've been around probably as long as most of you. So but with relation to policy and IAA specifically, first question.

Speaker #10: How do you see the IAA impacting on the potential fleet sales for Chinese OEMs? How restrictive do you think the IAA made in Europe policy might be?

Speaker #4: And with this, we expect a net EBIT improvement. And all this despite all the headwinds. We are faced with challenges geopolitically, in regulations, the market, and expenditures and transformation.

[Analyst]: I suspect you're closer to that than we are, and I'd love to understand that better because I think there is some potential there. Secondly, same question, but with relation to other policy, you're seeing some German government now looking to subsidize industrial electricity. You've seen the EU protecting the steel industry much more carefully. To what degree should we hope? You know, I always want to hope, and I'm always disappointed. To what degree should we hope that the EU or the European governments will actually start to try to finally start to help this industry? Hope you understand where my question's coming from.

Speaker #10: I suspect you're closer to that than we are. And I'd love to understand that better because I think there is some potential here. And then secondly, same question.

Speaker #10: But with relation to other policy, you're seeing some German government now looking to subsidize industrial electricity. You've seen the EU protecting the steel industry much more carefully.

Speaker #10: To what degree should we hope? I always want to hope. And I'm always disappointed. But to what degree should we hope that the EU or the European government will actually start to try to finally, finally start to help this industry?

Speaker #4: And we are able, because of all the work we have done during the last years, and so year to year, we would expect a better EBIT.

Speaker #4: Then in terms of models, variants, and then capacities, we with the program, we have launched we want to reduce our models and variants with a double-digit percentage and also the options.

Speaker #10: So hope you understand where my question's coming from.

Speaker #2: Yeah. And in terms of the made in Europe policy in from the European Commission, it hadn't been already fixed completely. But it is a European interest politic.

Oliver Blume: In terms of the Made in Europe policy in from the European Commission, it hadn't been already fixed completely, but it is a European interest politic which we support. This starts with a European production footprint, but then also to have different levels for components. Therefore, this has to be carefully balanced. I also agree that at the end the different regions could be comparable. What we see in other regions should happen in Europe, and then you have a fair competition. This has to be worked out.

Oliver Blume: We, with the program we have launched, we want to reduce our models and variants with a double-digit percentage, and also the options. There the idea is more to bundle offers, making it easier at the end also for our customers and more and more transparent to order a car. In terms of capacities, we come from an invested production footprint from over 12 million units. We already reduced 1 million in China in several plants, and some also linked to component plants. 1 million in Europe. There, for example, we closed Brussels, Russia, Dresden now turning to a technology and innovation campus.

Speaker #4: The idea is more to bundle offers, and so making it easier, at the end, also for our customers, and more and more transparent to order a car.

Speaker #2: Which we support. And this starts with a European production footprint. But then also to have different levels for components. Yeah. And therefore, this has to be carefully balanced.

Speaker #4: In terms of capacities, we come from an invested production footprint of over 12 million units. We already reduced 1 million in China, in several plants, and also linked to component plants.

Speaker #2: And I also agree that at the end, the different regions could be comparable. What we see in other regions should happen in Europe. And then you have a fair competition.

Speaker #4: Then 1 million in Europe. There, for example, we closed Brussels–Russia–Dresden, now turning to a technology and innovation campus. Then Osnabrück is on the way.

Speaker #2: Yeah. And this has to be worked out. Hardware components, focusing also on battery cells, battery systems, but at the end also in electric electronics, what could be included.

Oliver Blume: Hardware components, focusing also on battery cells, battery systems, but at the end, also in electric electronics, what could be included. We feel ourselves well prepared in Europe as a European player. We expect there fair or better conditions in terms of trade comparing with the competition. Energy is an important point. There, I think, should be important to focus also on the most important industries. For example, the battery industry right now in Germany, for example, is excluded from the energy regulations. That's for me a wrong decision.

Oliver Blume: Osnabrück is on the way and in Volkswagen and Audi, we adapted technological capacity, so one plus one. We are on 10 million, and we think that 9 million will be reasonable. Percentage of the last five years has been on this level. Last week, we announced another 500,000 in China. We are aiming now for reducing capacity in Germany, Europe, with another 500,000 to come to 9 million. We will bring down our cost level to this 9 million and aiming for more profitability.

Speaker #4: And Volkswagen and Audi, we adapted technological capacities. So 1 plus 1. So we are on 10 million, and we think that 9 million will be a reasonable percentage. The last five years have been on this level.

Speaker #2: And we feel ourselves well prepared in Europe as a European player. And we expect there fair or better conditions in terms of trade comparing with the competition.

Speaker #4: So last week, we announced another 500,000 in China. And we are aiming now for reducing capacity in Germany, Europe, with another 500,000 to come to 9 million.

Speaker #2: Energy is a important point. And there, I think it should be important to focus also on the most important industries for example, the battery industry right now in Germany, for example, is excluded from the energy regulations.

Speaker #4: And we will bring down our cost level to this 9 million. And aiming for more profitability.

Speaker #2: And that's for me a wrong decision. They have to expand the energy regulations also for battery plants because the battery industry is a crucial one for Germany and Europe.

Oliver Blume: They have to expand the energy regulations also for battery plants, because the battery industry is a crucial one for Germany and Europe, and this has to be supported. All right. Battery manufacturing or production is high energy intensive, and therefore, I think they have to adapt the regulations. That's only one example. At the end, energy counts for all, also for the charging infrastructure. That's what we see in other regions of the world or where the energy is on a very low level. The customer is calculating and switching to.

Speaker #2: Yeah, Tim, thanks for the question. And I would like to add on to what Oliver just said. All these measures he mentioned—look, Oliver laid out, or we laid out, our strategic margin target of 8 to 10 percent some months ago.

Arno Antlitz: Yeah, Tim, thanks for your question. I would like to add on what Oliver just said. You know, all these measures he mentioned. Look, Oliver laid out or we laid out our strategic margin target of 8% to 10% some months ago. Obviously, this transformation program we just laid out is the way in steps to achieve this margin target at the end of this decade. We now fill the gaps from where we currently trade, where to our current margin target is, what the headwinds are, and still be able to come up to the 8% to 10%.

Speaker #2: And this has to be supported. Battery manufacturing or production is high energy intensive. And therefore, I think they have to adapt the regulations. That's only one example.

Speaker #2: And obviously, this transformation program we just laid out is the way, in steps, to achieve this market margin target at the end of this decade.

Speaker #2: And at the end, energy counts for all, also for the charging infrastructure. That's what we see in other regions of the world where the energy is on a very low level.

Speaker #2: And we now fill the gaps from where we currently trade, whereas our current margin target is what the headwinds are, and still be able to come up to the 8 to 10 percent.

Speaker #2: And in terms of cash flow, yeah, we are quite pleased with the strong cash flow in Q1, given the seasonality of our business. Normally in Q1, we fill up the order bank.

Arno Antlitz: In terms of cash flow, yeah, we are quite pleased with the strong cash flow in Q1, giving the seasonality of our business normally in Q1, and we fill up the order bank. To be very transparent, now it's about EUR 1 billion coming from the operative business before special effects. EUR 1 billion, slightly less coming from tax payment versus last year. Last but not least, we were very disciplined on M&A, which is another EUR 1 billion. So we have to take into account that there's a slight seasonality. As you know, we were successful in the winter test, where we made good progress in our JV with Rivian.

Speaker #2: So the customer is calculating and switching to a battery electric vehicles. And there, we still have something to do, especially in Germany.

[Analyst]: Right.

Oliver Blume: Battery electric vehicles. There we still have something to do, especially in Germany.

Speaker #2: But to be very transparent, it's about a billion coming from the operative business before special effects. A billion slightly less coming from tax versus tax payment versus last year.

Speaker #10: OK. Thank you.

[Analyst]: Okay. Thank you.

Oliver Blume: Thank you, Harald. Thank you all actually for a very lively discussion. A lot to ask, a lot to debate. Clearly, you see that Volkswagen is moving ahead. This concludes the Q&A session for the investor and analyst call for today. If anything was left unanswered, please contact the RR team here in Wolfsburg. They're really happy that you're keeping them employed. After a short break of about 5 minutes, we will then continue with the media Q&A at about, I would say, 10:40, 10:42, something like that. Thank you.

Speaker #7: Thank you, Harald. Thank you all actually for a very lively discussion. A lot to ask and a lot to debate. Clearly, you see that Volkswagen is moving ahead.

Speaker #7: This concludes the Q&A session for the Investor and Analyst Call for today. If anything was left unanswered, yeah, please contact the R team here in Wolfsburg.

Speaker #2: And last but not least, we were very disciplined on M&A, which is another billion. And so we have to take into account that there's a slight seasonality. As you know, we were successful in the winter test, where we made good progress in our JV with Rivian.

Speaker #7: They're really happy that you're keeping them employed. And after a short break of about five minutes, we will then continue with the media Q&A.

Speaker #2: But as you also know, subject to the successful winter test, we will invest another billion—about $1 billion—in Rivian, which we'll see as an outflow in the second quarter.

Arno Antlitz: As you also know, subsequent to the successful winter test, we will invest in another about EUR 1 billion in Rivian, which will see an outflow in Q2. All in all, we are really confident, and we said that last year, on the conference call for last year, that the working capital measures are really well in place. The whole company is focused on cash flow. You know, we were like for years and years, we focused on EBIT. Now we really see a cultural change in the company. People are fighting for cash flow and net liquidity, for better working capital.

Speaker #7: At about, I would say, 10:40, 10:42, something like that. Thank you.

Speaker #11: We will now begin the Q&A sessions for our members of the media. As a reminder to ask a question, you will need to press star one and one.

Pietro Zollino: We will now begin the Q&A sessions for members of the media. As a reminder, to ask a question, you will need to press star one and one. Star eleven on your telephone. That's different than we had it in the previous calls. Wait for your name to be announced, please. If you want to withdraw your question, it's the same procedure. Please press star one and one. The first question comes from Frank Johansen from dpa. Please, Frank. Okay. I think we have an issue here. Maybe we will start with Christina Amann. Christina, you wanna start, please?

Speaker #2: All in all, we are really confident. And we said that last year, on the conference calls for last year, that the working capital measures are really well in place.

Speaker #11: So star 11 on your telephone is different than we had it in the previous calls. And wait for your name to be announced, please.

Speaker #11: If you want to withdraw your question, it's the same procedure. Please press star one and one. And the first questions comes from Frank Johannsen from DPA.

Speaker #2: The whole company is focused on cash flow. You know, we were like for years and years, we focused on EBIT. Now we really see a cultural change in the company.

Speaker #11: Please, Frank. OK. I think we have an issue here. So then maybe we will start with Christina Amann. Christina, you want to start, please?

Speaker #2: People are fighting for cash flow and net liquidity for better working capital. So this is really now implemented in everybody's minds, and gives us a confidence that we will achieve the $3 to $6 billion this year.

Arno Antlitz: This is really now implemented in everybody's minds and gives us a confidence that we will achieve the EUR 3 to 6 billion this year. Obviously, it's much too early to change the guidance, but the building blocks are clear. Certain cost work, I would like to remember you, overhead cost reduction of almost EUR 1 billion in one quarter, which is significant, much more disciplined M&A, and disciplined R&D and CapEx combined, should by far compensate for potential headwinds we see from the market.

Speaker #11: Fortunately, we can't hear you. OK. That seems to be technical issues.

Arno Antlitz: Unfortunately, we cannot hear you. There seems to be technical issues.

Speaker #12: English stimmt nicht. OK.

Speaker #11: Hallo? Hallo?

Christina Amann: Hello?

Arno Antlitz: It's okay.

Speaker #12: Hallo? Ja, jetzt kann ich Sie hören.

Christina Amann: Hello?

Arno Antlitz: Hello. Yeah.

Christina Amann: Yes. Now it works. There was something.

Speaker #11: Hi. Yes. Now it works. There was something.

Speaker #2: Which is significant. Much more disciplined M&A, and disciplined R&D and CapEx combined should by far compensate for potential headwinds we see from the market.

Arno Antlitz: Perfect.

Speaker #12: Perfect.

Speaker #11: OK. I got a few questions. The first thing, Mr. Blume, you talked about German or English.

Christina Amann: Okay. I got a few questions. The first thing, Oliver Blume, German or English?

Speaker #3: Thank you very much.

Tim Rokossa: Thank you very much.

Speaker #12: I think English because I mean, we have maybe some English-speaking guests as well.

Arno Antlitz: I think English, because, I mean, we have maybe some English-speaking guests as well.

Speaker #2: Thank you, Tim. And we will continue with Patrick Hummel from UBS. Patrick, please go ahead.

Arno Antlitz: Thank you, Tim. We will continue with Patrick Hummel from UBS. Patrick, please go ahead.

Rolf Woller: Thank you, Tim. We will continue with Patrick Hummel from UBS. Patrick, please go ahead.

Speaker #11: OK. You have talked about chances talking to Chinese companies producing cars in European Volkswagen plants. Do you have any details? What kind of companies you're talking about?

Christina Amann: Okay. You have talked about chances of talking to Chinese companies producing cars in European Volkswagen plants. Do you have any details what kind of companies you are talking about, what kind of plants you are talking about? Is there anything going on already or is that rather an option for the future? Would that be your existing partners like FAW, SAIC or XPeng, or would that be completely different companies? The second question is, have you already asked for refunds on the IEEPA tariffs and others which are deemed illegal in the US now? Do you expect anything? Do you expect a negative reaction from Trump? Third question is regarding the capacity. You really say capacity numbers in Europe, you said 500,000 should go. Would that be mostly brand Volkswagen? Would that be other brands? What about Porsche?

Patrick Hummel: Thank you, Rolf. Good morning, everybody. I would just like to follow up, Oli, please, regarding your comments about the cost and capacity alignment. I think the point Tim brought up was also about, you know, whether you can get ahead of the wave, so to say, or you remain reactive to safeguard margins rather than, you know, driving a margin recovery. Can I ask a bit more precisely what kind of timeline we have to expect here for the exercise to cut the capacity by another 1 million? I guess the focus here is on that 0.5 million that's yet to come in Europe.

Speaker #11: What kind of plants you're talking about? Is there anything going on already? Or is that rather an option for the future? Would that be your existing partners like FAW, SAIC, or Xiaopeng?

Speaker #11: Or would that be completely different companies? The second question is, have you already asked for refunds on the EIPA tariffs and others which are doomed illegal in the US now?

Speaker #5: So, can I ask a bit more precisely what kind of timeline we have to expect here for the exercise to cut the capacity by another million? I guess the focus here is on that half million.

Speaker #11: And do you expect anything? Do you expect the negative reaction from Trump? Third question is regarding the capacity utilization numbers in Europe. You said 500,000 should go.

Speaker #5: That's yet to come in Europe. Are we talking about the next one to two years, so that we will already see a significant positive bottom-line impact in 2027 or 2028?

Speaker #11: Would that be mostly brand Volkswagen? Would that be other brands? What about Porsche? And do you have any figures on how many jobs would need to be cut already?

Christina Amann: Do you have any figures on how many jobs would need to be cut already? On what oil price is your outlook based, and is there a risk of the outlook if the oil price is staying where it is right now? Thank you.

Speaker #11: And on what oil price is your outlook based? And is there a risk of outlook if the oil price is staying where it is right now?

Speaker #5: We're now two months into that crisis. And so far, it seems the demand impact is very limited. Can you just remind us for potential pain points would be?

Speaker #11: Thank you.

Speaker #12: Yeah. Mr. Amann, good morning. Then I will take the first and the third question. And maybe Arno can answer the refunds and the oil pricing.

Oliver Blume: Yeah. Ms. Amann, good morning. I will take the first and the third question, and maybe Arno can answer the refunds and the oil pricing. Chinese companies in Europe, we have clear priorities in adapting capacities. And for example, in Osnabrück, we are in constructive talks with defense industry. Yeah, that's first approach because there's a big need, and I think this is good also great support from Volkswagen to our interest in Germany and for the NATO to support with our knowledge of automization and the qualification of our people, first of all. We haven't kicked off any thinking about Chinese products or partners to work in Europe.

Speaker #5: Is it just the softening of global SAR? Is it maybe an acceleration of the commodity inflation in the second half, as we've heard from some of your competitors?

Speaker #12: Chinese companies in Europe, we have clear priorities in adapting capacities. And for example, in Osnabrück, we are in constructive talks with defense industry. That's first approach because there's a big need.

Speaker #5: Just to get a better feel about the risks related to the Middle East situation. Thank you.

Patrick Hummel: Just to get a better feel about the risks related to the Middle East situation. Thank you.

Speaker #3: Yeah, Patrick. In terms of cost reduction, as you know, the implemented programs we are running are providing already results. For example, the overhead reduction Arno mentioned.

Oliver Blume: Yeah, Patrick, in terms of cost reduction, as you know, the implemented programs we are running, are providing already results. For example, the overhead reduction Arno mentioned. On the other side, what we will strengthen right now is we call it operational excellence, is even more cost work in terms of engineering, purchasing, production, sales, and then quality, for example. This is a program which has already started. We'll provide results already this year and even more in the period up to 2030. The other part, adapting capacities in China, the 1.5 are already done.

Speaker #12: And I think this could also a great support from Volkswagen. To our interest in Germany and for the NATO to support with our knowledge of automatization and the qualification of our people.

Speaker #3: On the other side, what we will strengthen right now is what we call operational excellence. It's even more cost work in terms of engineering, purchasing, production, sales, and then quality, for example.

Speaker #12: First of all, then we haven't kicked off any thinking about Chinese products or partners. To work in Europe. If we would do it in our activities of adapting capacities, we would start with our own products from Hefe province, for example, products.

Oliver Blume: If we would do it in our activities of adapting capacities, we would start with our own products from Hebei province, Volkswagen products. Second step could be Volkswagen products from our joint venture partners we are working together. That's the priorities, but we haven't kicked off because at the end we need the free capacities. Now, today, the plants in Germany are saturated with this product. At the end, this is part of the transformation plan we would have. In terms globally, and to say once again, the steps we have taken, we come from a invested footprint of over 12 million units.

Speaker #3: This is a program with us already started. We'll provide results already this year. And even more, in the period up to 2030. The other part, adapting capacities in China, the 1.5 are already done.

Speaker #12: Then second step could be Volkswagen products from our joint venture partners. We are working together. And that's the priorities. But we haven't kicked off because at the end, we need the free capacities.

Speaker #3: In Germany, we announced the 1 million, which is on a good way. We will complete up to 2028. For example, the adaption we have done already in Audi in Neckarsulm and in Ingolstadt, and the adaptions we are doing at Volkswagen.

Oliver Blume: In Germany, we announced the 1 million, which is on a good way. We will complete up to 2028. For example, the adaptation we have done already in Audi, in Neckarsulm, and in Ingolstadt, and the adaptations we are doing at Volkswagen. A further 500,000 will be in the program by 2030. Now, that depends a bit on what we do have, the production lines right now, what opportunities we have to switch. But most importantly is the reduction of our plant costs. You know, that's the main target. Last year, we were able to reduce our plant costs of over 20%, and that's ongoing and even more.

Speaker #12: Today, the plants in Germany are saturated with products. And at the end, this is part of the transformation plan we would have. In terms globally and to say once again the steps we have taken, we come from an invested footprint of over 12 million units.

Speaker #3: And a further 500,000 will be in the program by 2030. Now that depends a bit what we do have in the production lines right now.

Oliver Blume: Then we have already reduced EUR 1 million in China, EUR 1 million in Europe. The next EUR 500,000 are agreed in China. Coming to a level of EUR 9 million, which I explained before in the investors call. We are working now to check where we do have the opportunities. That's Germany and Europe. Overall, we have the production cost per car to come to an average level of EUR 3,000, which is competitive in Europe. Now, that's our primary goal. Then we are coming with flexible approaches to achieve this. This EUR 9 million level is not what we are expecting in the market. Our plans in the market are more ambitious in terms of sales.

Speaker #12: Then we have already reduced 1 million in China, 1 million in Europe. The next 500,000 are agreed in China. So coming to a level of 9 million which I explained before, the investors call, we are working now to check where we do have the opportunities.

Speaker #3: What opportunities we have to switch. But most importantly is the reduction of our plant costs. That's the main target. And last year, we were able to reduce our plant cost of over 20%.

Speaker #3: And that's ongoing. And even more. And there's no argument not being able working on the same cost level like competitors in Europe. And there especially our plants in Eastern and Western Europe are helping.

Oliver Blume: There's no argument not being able working on the same cost level like competitors in Europe. There, especially our plants in Eastern and Western Europe are helping.

Speaker #12: That's Germany and Europe. Overall, we have the production cost per car to come to an average level of 3,000, which is comparative in Europe.

Speaker #2: Yeah, Patrick, I would like to give you some flavor perhaps a little bit more on the details. On fuel and on other costs, we expect 20 to 30 million a month for transportation.

Arno Antlitz: Patrick, I would like to give you some flavor, perhaps a little bit more on the details on fuel and on other costs. We expect EUR 20 to 30 million a month for transportation. We have planned about 50,000 to 100,000 cars in the region, which is less than 1% of our volume, but which now try to find alternative ways to deliver the cars to the customers, specifically for the premium brands. I think Porsche found good ways there. On the raw material side, we are hedged most of it. Of course, you never hedge 100%, but we have some good hedgings.

Speaker #12: That's our primary goal. And then we are coming with flexible approaches to achieve this. And these 9 million level is not what we are expecting in the market.

Speaker #2: We have planned about 50 to 100,000 cars in the region which is less than 1% of our volume. But which now try to find alternative ways to deliver the cars to the customers, specifically for the premium brands.

Speaker #12: Our plants in the market are more ambitious. In terms of sales, that's more to bring us in a better situation and on the other side, bringing down our break, break even level.

Oliver Blume: That's more to bring us in a better situation and, on the other side, bringing down our break-even level. That's the intention. Handing over to Arno.

Speaker #2: I think Porsche found good ways there. On the raw material side, we are hedged. Most of it. Of course, you never hedge 100%. But we have some good hedgings.

Speaker #12: That's the intention. And then handing over to Arno. Yeah. The remaining two questions very quick. In terms of refunds of tariffs, are the tariffs still in place?

Arno Antlitz: Yeah. The main two questions, very quick. In terms of refund of tariffs, all the tariffs are still in place. They are not, it changed. And there are some minor refund possibilities, for example, for parts, not vehicles. Obviously, if we have the chance to get refund, we have to fight for that. But it's more like a small double-digit EUR million in the magnitude. This compares to the EUR 4 to 5 billion headwind, just to give you an idea. In terms of oil price outlook, I talked on that already in the investor call. Our direct headwind is about EUR 20 to 30 million for fuel per month.

Arno Antlitz: And also on the order intake, I just said that the order intake is also slightly increased. What we cannot rule out second-round effects, both in terms of global demand and on material costs. Of course, this is a risk. We cannot rule out that, but this is another motivation to increase our efforts on the cost side on the cash flow side to compensate for that. This is where we stand currently.

Speaker #2: And also on the order intake, I just said that the order intake has also slightly increased. So we cannot rule out second-round effects, both in terms of global demand and on material cost.

Speaker #12: They are not changed. And there are some minor refund possibilities. For example, for parts not vehicles. And obviously, if we have the chance to get a refund, we have to fight for that.

Speaker #2: Of course, this is a risk. And we cannot rule out that. But this is another motivation to increase our efforts on the cost side to on the cash flow side to compensate for that.

Speaker #12: But it's more like a small double-digit million in a magnitude. And this compares to the 4 to 5 billion headwind, just to give you an idea.

Speaker #2: So this is where we stand currently.

Speaker #5: Thank you both.

Patrick Hummel: Thank you both.

Speaker #2: Thank you, Patrick. And we will continue now with Mike Tindall from HSBC. Mike, please go ahead.

Arno Antlitz: Thank you, Patrick. We will continue now with Michael Tyndall from HSBC. Mike, please go ahead.

Rolf Woller: Thank you, Patrick. We will continue now with Michael Tyndall from HSBC. Mike, please go ahead.

Speaker #12: And in terms of oil price outlook, I talked on that already in the investor call. Our direct headwind is about 20% to 30 million for fuel per month.

Speaker #6: Hello. Not sure if you can hear me. Still showing muted.

Michael Tyndall: Hello. Not sure if you can hear me. Still showing muted.

Mike Tyndall: Hello. Not sure if you can hear me. Still showing muted.

Speaker #12: In terms of demand, we see still a strong demand in the first quarter. Both for ICE and BV vehicles. We cannot rule out that the total demand overall will be there's might be some headwinds depending on how long the closure of the Strait of Hormuz will continue.

Arno Antlitz: In terms of demand, we see still a strong demand in Q1, both for ICE and BEV vehicles. We cannot rule out that total demand overall will be weak. There's might be some headwinds depending on how long the closure of the Strait of Hormuz will continue. We prepare for a potential more headwind going on. So far, we don't see a impact on order intake in Europe.

Speaker #2: We can.

Arno Antlitz: We can.

Rolf Woller: We can.

Speaker #6: You can hear me? Excellent. Mike from HSBC. Just a couple of questions, if I can. I'm trying to get my head around the 9 million of capacity which is broadly where we are in current sales.

Michael Tyndall: You can hear me? Excellent.

Mike Tyndall: You can hear me? Excellent.

Arno Antlitz: Yes. Loud and clear.

Michael Tyndall: Mike from HSBC. Just a couple of questions, if I can. I'm trying to get my head around the 9 million of capacity, which is broadly where we are in current sales.

Mike Tyndall: Mike from HSBC. Just a couple of questions, if I can. I'm trying to get my head around the 9 million of capacity, which is broadly where we are in current sales.

Speaker #6: But we've got growth in North America and the Global South. And if I'm not wrong, growth in China. Is there an implication here that potentially Europe gets smaller from a volumes perspective?

Michael Tyndall: We've got growth in North America and the Global South, and if I'm not wrong, growth in China. Is there an implication here that potentially Europe gets smaller from a volumes perspective, or am I just trying to jiggle the numbers around too much? The other question is, your components business did a 9% margin in Q1. I mean, compared to other suppliers, that's a very rich margin. And I know that, you know, one part feeds into the other, where are you in terms of benchmarking what you're paying the components business versus third parties? Is there scope there to actually squeeze more cost out of that? Curious to know why that margin is so high when Brand Group Core is potentially lower than it should really be. Thanks.

Mike Tyndall: We've got growth in North America and the Global South, and if I'm not wrong, growth in China. Is there an implication here that potentially Europe gets smaller from a volumes perspective, or am I just trying to jiggle the numbers around too much? The other question is, your components business did a 9% margin in Q1. I mean, compared to other suppliers, that's a very rich margin. And I know that, you know, one part feeds into the other, where are you in terms of benchmarking what you're paying the components business versus third parties? Is there scope there to actually squeeze more cost out of that? Curious to know why that margin is so high when Brand Group Core is potentially lower than it should really be. Thanks.

Speaker #12: So we prepare for a potential more headwind going on. But so far, we don't see an impact on order intake in Europe. OK. Thanks both.

Speaker #6: Or am I just trying to jiggle the numbers around too much? And then the other question is, your components business, did a 9% margin in Q1.

Pietro Zollino: Okay. Thanks both. Frank, we believe in second chances. Frank from dpa, you wanna try again?

Speaker #12: Frank, we believe in second chances. Frank from DVA wanted to try again.

Speaker #13: Let me know.

Frank Johansen: Can you hear me now?

Speaker #12: Yes. Perfect. Go ahead.

Pietro Zollino: Yes. Perfect. Go ahead.

Speaker #13: Perfect. OK. Actually, to follow up questions to the last question, the first one, if you want to reduce 500,000 additionally in Europe does it mean primarily in Germany or is it not still decided?

Frank Johansen: Perfect. Okay. Actually 2 follow-up questions to the last question from the colleague. First one, if you wanna reduce 500,000 additionally in Europe, does it mean pri-temporary in Germany, or is it not still decided? Will that work without closure of plants in Germany or Europe, especially of course in Germany? The second question, facing Osnabrück, the NOZ newspaper today reported that you are in advanced talks with Rafael or Dynamit Nobel, which is part of Rafael, about the pro-production facilities in Osnabrück and the plant. The newspaper says there's already a letter of intent which is signed. Can you confirm that? Can you tell any details what's planned there? Yes. Thank you.

Speaker #6: Is there scope there to actually squeeze more cost out of that? Curious to know why that margin is so high when Brand Group Core is potentially lower than it should really be?

Speaker #13: And will that work without closure of plants in Germany or Europe? Especially, of course, in Germany. And the second question, facing Osnabrück, the NOZ newspaper today reported that you are in advanced talks with Raphael or Dynamite Nobel which is part of Raphael about the production facilities in Osnabrück and the plant.

Speaker #6: Thanks.

Speaker #3: Yeah, Mike. Let me start with your first question, and then I'll hand over to Arno with a component question. To make it very clear, the 9 million capacity is what we have seen on average during the last five years.

Oliver Blume: Yeah, Mike, let me start with your first question and then I hand over to Arno Antlitz with a component question. To make it very clear, the 9 million capacity is what we have seen in average during the last 5 years. Our product planning is ambitious and also our sales planning is ambitious. What we are doing here is on the one hand side to adapt our cost structure for 9 million cars in terms of a risk scenario. What could happen if? On the other side, we are working on a more ambitious sales planning. This leads us to bring down our break-even situation and making our financial situation more and more robust. Now, that's behind this planning.

Speaker #13: And the newspaper says there's already a letter of intent which is signed. Can you confirm that? Can you tell any details what's planned there?

Speaker #3: Our product planning is ambitious. And also our sales planning is ambitious. But what we are one hand side, to adapt our cost structure for 9 million cars in terms of a risk scenario.

Speaker #13: Yes. Thank you.

Speaker #12: We have announced that we want to come to a feasible production footprint of 9 million cars. That's what we have sold per average during the last five years.

Oliver Blume: We have announced that we want to come to a feasible production footprint of 9 million cars. That's what we have sold per average during the last 5 years. Our ambition in terms of sales is higher, but we think to be on the safe side and improving our breakeven situation, that would be the feasible one. Talking about Osnabrück, as I mentioned already, our talks are advanced already. We do not comment the partners we are dealing with. Overall, I think, we feel ourselves as an experienced company in terms of automization and with very qualified people, also in the responsibility for the goals of the German government for the country protection.

Speaker #3: What could happen if? And on the other side, we are working on a more ambitious sales planning, and this leads us to bring down our break-even situation.

Speaker #12: Our ambition in terms of sales is higher. But we think to be on the safe side. And improving our break-even situation, that would be the feasible one.

Speaker #3: And making our financial situation more robust—that's behind this planning. And when, at the end, all the new products, and they're very confident because of the feedback we are getting right now for all the new products coming to the market right now, we would be better—that we'll be in positive effect in terms of our margin situation and EBIT at the end.

Speaker #12: And talking about Osnabrück, as I mentioned already, our talks are advanced already. We do not comment. The partners we are dealing with. Overall, I think we feel ourselves as a experienced company in terms of automation with very qualified people.

Oliver Blume: When at the end, all the new products, we are very confident because of the feedback we are getting right now for all the new products, coming to the market right now. We would be better. There will be a positive effect in terms of our margin situation and EBIT at the end.

Speaker #2: Yeah, Mike. And second question. First and foremost, the component business—the majority of the component business—is also part of Volkswagen AG. Just to remind you, in Volkswagen AG, we have the component business in Kassel, which is doing gearboxes; Salzgitter engine plants; and Braunschweig, which is handling steering and axle components.

Speaker #12: Also, in the responsibility for the goals of the German government for the country protection. And this from our part is also to provide to stabilize democratization in Germany.

Arno Antlitz: Yeah, Mike, to your second question, first and foremost, the component business, the majority of the component business is also part of the Volkswagen AG. Now, just to remind you, in the Volkswagen AG, we have the component business in Kassel, which is doing gearboxes, Salzgitter engine plants and Braunschweig, steering and axle components. All the cost efforts we see so far. For example, I said since 2023, 15,000 reductions in the Volkswagen AG is always also happening in the component business, because they have three big plants there. Also, the improvement in the overhead costs.

Oliver Blume: This from our part is also to provide, to stabilize democratization in Germany. Therefore, I think it's a win-win situation at the end, to adapt plant capacities and on the other side support the goals of the German government and European governments in terms of NATO.

Speaker #2: And so all the cost efforts we see so far, for example, I said since 2023, 15,000 reductions in the Volkswagen AG, is always also happening in the component business.

Speaker #12: Therefore, I think it's a win-win situation at the end to adapt plant capacities. And on the other side, support the goals of the German government and European governments in terms of NATO.

Pietro Zollino: Okay. I hope this answers the question. Next in line would be Lazar Bakovic from Handelsblatt. Lazar, please. Line is yours.

Speaker #12: OK. I hope this answers the question. Next in line would be Lazar Bakovic from Handelsblatt. Lazar, please. The line is yours.

Speaker #2: Because they have three big plants there. Also, the improvement in the overhead costs. And what you can see now here is we haven't basically changed the pricing logic between the Brand Group and the brands, and the components business.

Speaker #13: Hello and thank you, Arno. You mentioned your plant costs during the investor call and repeated here your goal is to reach 3,000 euros in Europe.

Lazar Bakovic: Good morning, thank you. Arno Antlitz. You mentioned your plant costs during the investor call and repeated here your goal is to reach EUR 3,000 in Europe. You are conducting reviews at your German plants. Can you tell us where you stand in Q1 2026 and whether you met your cost target there at your key plants? That will be the first question, the second would also be on Chinese vehicles and Chinese VW models which could possibly build in Europe. I mean, technically, they are based on a different platform on the CSP. Will this platform be localized for Europe? Can you comment on that?

Arno Antlitz: What you can see now here is we haven't basically changed the pricing logic between the brand groups and the brands and the component business. We kept basically the logic of the prices stable. What you see now is basically we measure the improvement of the Volkswagen turnaround of the Volkswagen Zukunft project in that it's working in the component business. Nevertheless, we need more contributions also from our component business. The competition is coming to Europe and our component business, for example, is also producing electric engines, producing batteries for the material. We need also to significantly step up the improvements there in order to be competitive for our cars versus competition.

Speaker #13: You are conducting reviews at your German plants. Can you tell us where you stand in the first quarter of 2026 and whether you met your cost target there at your key plants?

Speaker #2: And we kept basically the logic of the prices stable. And what you see now is basically we measure the improvement of the Volkswagen turnaround of the Volkswagen Zukunft project that it's working in the component business.

Speaker #13: That would be the first question. And the second would also be on Chinese vehicles and Chinese VW models which could possibly build in Europe.

Speaker #13: I mean, technically, they are based on a different platform on the CSP so will this platform be localized for Europe? Can you comment on that?

Speaker #2: And we need also to significantly step up the improvements there in order to be competitive for our cars versus competition.

Speaker #12: Yeah. Mr. Bakovic, we have a clear goal that we want to achieve. We make progress in the German which is significant last year, but we have still a long way to go.

Arno Antlitz: Yeah. Mr. Bakovic, we have a clear goal that we wanna achieve. We make progress near in the German plants by 20%, which is significant last year. We have still a long way to go to be cost competitive and obviously we have to pull all the levers. Productivity, and this is also why we discuss the topic of capacity. Now the Chinese are coming to Europe, building also factories which are highly efficient, and we cannot compete with underutilized plants. The improving the utilization is a key lever to make our German plants competitive. This is why we continue to work also on improving the utilization.

Speaker #6: Okay, that sounds great. Thank you.

Michael Tyndall: Okay. That sounds great. Thank you.

Mike Tyndall: Okay. That sounds great. Thank you.

Speaker #2: Thank you, Mike. And we will continue with Tom Narayan from RBC. Tom, please go ahead.

Speaker #12: To be cost competitive and obviously, we have to pull all the levers. Productivity and this is also why we discussed the topic of capacity.

Arno Antlitz: Thank you, Mike. We will continue with Tom Narayan from RBC. Tom, please go ahead.

Rolf Woller: Thank you, Mike. We will continue with Tom Narayan from RBC. Tom, please go ahead.

Speaker #7: Hi, thanks. Tom Narayan, RBC. The first one, Arno, on the '26 guidance—I noticed there wasn't any booking for the benefit on the IEPA, the Supreme Court ruling in the US.

Tom Narayan: Hi. Thanks. Tom Narayan, RBC. The first one, Arno, on the 2026 guidance, I noticed there wasn't any booking for the benefit on the IEEPA, the Supreme Court ruling in the US. Other competitors have booked pretty large benefits there in Q1. I was just curious why you guys didn't book that. I know you have a lot of hedging, but the other OEMs are noticing pretty big H2 headwinds. Is it that you're not expecting those H2 headwinds? That's the first question on the guidance. Oli, on the Chinese partnerships, is there any potential for the US? I know it's a politically maybe sensitive topic, but what do you see out of that as a possibility of the Chinese relationships in the US? Thanks.

Speaker #12: The Chinese are coming to Europe building also factories which are highly efficient. And we cannot compete with underutilized plants. So improving the utilization is a key lever to make our German plants competitive.

Speaker #12: And this is why we continue to work also on improving the utilization.

Speaker #13: In terms of Chinese platforms, I talked before only about options. And today, it's too early to decide if we want to localize a Chinese platform in Germany.

Oliver Blume: In terms of Chinese platforms, I talked before only about options. Today it's too early to decide if we want to localize a Chinese platform in Germany. Our priority would be, first of all, when we or if we would do it, to take one of our own platforms first. Because this year we are ramping up the CMP platform and the ramp-up for the CSP is planned for 2027 in China. This work has to be done first, and then we could think about options in Europe. On the other side, also to check which products could be the right ones.

Speaker #7: Is it that you're not expecting those H2 headwinds? That's the first question on the guidance. And then, Ollie, on the Chinese partnerships— is there any potential for the US?

Speaker #7: I know it's a politically maybe sensitive topic. But what do you see out of that as a possibility of the Chinese relationships in the US?

Speaker #13: But our priority would be first of all, when we or if we would do it, to take one of our own platforms first. Because this year, we are ramping up the CMP platform.

Speaker #7: Thanks.

Speaker #2: Tom, I start with the second question in terms of I assume you're referring to the EBIT bridge, right? That it's basically positive. Yeah. That's a little bit counterintuitive.

Oliver Blume: Tom, I start with the second question in terms of I assume you're referring to the EBIT bridge, right?

Arno Antlitz: Tom, I start with the second question in terms of I assume you're referring to the EBIT bridge, right?

Speaker #13: And the ramp-up for the CSP is planned for 2027 in China. And this work has to be done first. And then we could think about options in Europe.

Tom Narayan: Yeah.

Oliver Blume: It's basically positive. Yeah. It's a little bit counterintuitive. It shows that we have some very good hedgings there in place. I would say, and it's also versus last year, no? It was the EBIT bridge, the effect versus last year. Last year, I think it was negative Q1 by EUR -300 something, also EUR -400. It's basically a reversal of some of the effects. We don't expect the positive effect throughout the year to stay here. I mean, we have to face realities, no? The major currencies are weak. We have a lot of exports in USD regions and others.

Arno Antlitz: It's basically positive. Yeah. It's a little bit counterintuitive. It shows that we have some very good hedgings there in place. I would say, and it's also versus last year, no? It was the EBIT bridge, the effect versus last year. Last year, I think it was negative Q1 by EUR -300 something, also EUR -400. It's basically a reversal of some of the effects. We don't expect the positive effect throughout the year to stay here. I mean, we have to face realities, no? The major currencies are weak. We have a lot of exports in USD regions and others.

Speaker #2: It shows that we have some very good hedging there in place. But if you—I would say, and it's also versus last year. It was, the EBIT bridge is the effect versus last year.

Speaker #13: And on the other side, also to check which products could be the right ones. We are getting right now the feedback and response from the market for our first new products in China.

Oliver Blume: We are getting right now the feedback and response from the market for our first new products in China. There are many more to come. At the end, we will decide, depending on the success we have in China, which model would fit in Europe, especially in segments where we are not present, with our current portfolio in Europe, right? So step by step. It's too early, and we haven't kicked off the process, and we haven't taken a decision.

Speaker #13: And there are many more to come. And then at the end, we will decide depending on the success we have in China which model would fit in Europe.

Speaker #2: And last year, I think it was negative in the first quarter by minus 300-something, also minus 400. So it's basically a reversal of some of the effects.

Speaker #2: But we don't expect that the positive effect throughout the year will stay here. I mean, we have to face realities. Major currencies are weak.

Speaker #13: Especially in segments where we are not present with our current portfolio in Europe. And so step by step, but it's too early. And we haven't kicked off the process.

Speaker #2: We have a lot of exports. In dollar region and others. Since we are hedged, we don't expect the significant headwind in that topic. In terms of EBIT bridge but for the operative business, it's obviously a headwind.

Speaker #13: And we haven't taken a decision. Quick or short follow-up because it wasn't the question. So the first quarter of 2026, you did meet your cost targets in the plants or not?

Lazar Bakovic: Mm-hmm. quick or short follow-up because it wasn't a question. The Q1 2026, you did meet your cost targets in the plants or not? Can you not comment on that?

Arno Antlitz: Since we are hedged, we don't expect a significant headwind in that topic, in terms of EBIT bridge. For the operative business, it's obviously a headwind. As you know, hedges don't last forever, and the next hedges will be more expensive. Yes, it's a headwind. It's, I would say, a temporary effect positive, it shouldn't turn significant negative throughout the year. In terms of EA PAA, nothing is booked in Q1 results. It's too early to say to what extent we will book a benefit in the remainder of the year. We will come back to you with or to all of you with that topic potentially in Q2.

Speaker #13: Or can you not comment on that?

Speaker #2: And as you know, hedges don't last forever. And the next hedges will be more expensive. So yes, it's a headwind. I would say it's a temporary effect, positive.

Speaker #12: No. We are on track to improve. We have still a target gap last year. And we make progress. But it's too early to give you an indication for 2026.

Oliver Blume: No, we are on track to improve. No, we have a still a target gap last year, and then we make progress. It's too early to give you an indication for 2026.

Speaker #2: But it shouldn't turn significant negative throughout the year. And in terms of EAPA, nothing is booked in Q1 results. It's too early to say to what extent we will book a benefit in the remainder of the year.

Speaker #13: OK. But being very, very clear, the progress we are doing and I personally from production we have never seen a progress what we have seen last year.

Lazar Bakovic: Okay.

Oliver Blume: Being very clear, the progress we are doing, and personally from production, we have never seen a progress what we have seen last year. Over 20% is massive. We haven't seen this 10 or 20 years before. There was more or less in terms of production cost, a compensation of inflation with our productivity work. This 20% is also compared to the competition, a massive progress. Being very clear on this, and we are continuing on this path, and we know how to do it.

Speaker #13: Over 20% is massive. And we haven't seen this 10 or 20 years before. There was more or less in terms of production cost a compensation of inflation with our productivity work.

Speaker #2: We will come back to you, or to all of you, with that topic potentially in Q2.

Speaker #3: Tom, coming to your second question in terms of Chinese partnerships. First of all, Volkswagen Group, it's there in a global automotive player, having a strong footprint in China.

Oliver Blume: Tom, coming to your second question in terms of Chinese partnerships. First of all, Volkswagen Group is there in a very positive situation as a global automotive player, having a strong footprint in China, but also in the Western world, where we can benefit from innovation speed and then processes. We decided to go for two ecosystems. One is China, also with our partnership there, for example, with XPeng and then Horizon Robotics. We can see already the first results with our first SEER architecture, the SEER we presented at the end of last year. The first cars are entering into the market right now. This is a blueprint in terms of architecture also for our Rivian joint venture.

Speaker #13: And this 20% is also compared to the competition a massive progress being very clear on this. And we are continuing on this part. And we know how to do it.

Speaker #3: But also in the Western world. Where we can benefit from innovation speed and then processes. We decided to go for two ecosystems. One is China.

Speaker #13: Thank you, Oliver.

Lazar Bakovic: Thank you, Oliver.

Pietro Zollino: Okay. Very well. Thanks, Lazar. I can see Bloomberg is next in line. Monica, good to have you on the call. Can you please take the mic?

Speaker #12: OK. Very well.

Speaker #13: Thanks, Lazar. So I can see Bloomberg is next. In line, Monica. Good to have you on the call. Can you please? Take the mic?

Speaker #14: Good morning. Can you hear me all right?

[Journalist]: Good morning. Can you hear me all right?

Oliver Blume: Very good. Yeah, very good.

Speaker #13: Very good. Yeah. Very good.

Speaker #3: Also with our partnership there—for example, with Chaopeng and then Horizon Robotics—we can already see the first results with our first 7L architecture.

Speaker #14: Wonderful. Thanks so much. I guess I would just expand on some of the questions surrounding Chinese partnerships. And how those could potentially be leveraged in European plants.

[Journalist]: Wonderful. Thanks so much. I guess I would just expand on some of the questions surrounding Chinese partnerships, and how those could potentially be leveraged in European plants. Mr. Blume, have you discussed the possibility of Chinese partnerships with labor leaders? I'm wondering how they have reacted to this option. How far along would these talks be? I guess on the labor side, are there certain red lines or concrete conditions of such a partnership? My second question would focus mostly on what's happening in the Middle East. I know the fallout so far has been limited, specifically when it comes to deliveries in the region.

Speaker #3: They see her. We presented at the end of last year, and the first cars are entering into the market right now. And this is a blueprint.

Speaker #14: Mr. Bloomer, have you discussed the possibility of Chinese partnerships with labor leaders? And I'm wondering how they have reacted to this option. How far along would these talks be?

Speaker #3: In terms of architecture, also for our Rivian joint venture. In the Western world, we have a distance of around one and a half years.

Oliver Blume: In the Western world, we are have a distance of around 1 and a half year, comparing with our Chinese activities. This brings us in the situation to have a clear comparison in terms of speed and content, what we have achieved in China. We are very happy about the progress I mentioned with our Rivian joint venture. Coming back to the two ecosystems, what we are doing in China right now, will help us also for the whole southern hemisphere. We can localize our local platforms from China, the China main platform, bringing this to a global main platform, for example, for South America.

Speaker #14: And I guess on the labor side, are there certain red lines or concrete conditions of such a partnership? And then my second question would focus mostly on what's happening in the Middle East.

Speaker #3: Comparing with our Chinese activities. And this brings us into the situation to have a clear comparison, in terms of speed and content, of what we have achieved in China.

Speaker #14: I know the fallout so far has been limited specifically when it comes to deliveries in the region. But we know that the conflict has raised energy and shipping costs in the short term.

Speaker #3: But we are very happy about the progress I mentioned with our Rivian joint venture. Coming back to the two ecosystems, what we are doing in China right now will help us also for the whole Southern Hemisphere.

[Journalist]: We know that the conflict has raised energy and shipping costs in the short term, and General Motors was already saying that it's seeing higher cost across the board from aluminum and steel.

Speaker #14: And GM was already saying that it's seeing higher costs across the board from aluminum and steel.

Speaker #3: We can localize our local platforms from China to the China main platform, bringing this to a global main platform. For example, for South America. And we have huge export opportunities now from China.

Oliver Blume: Okay. Did you finish your question? Hello, can you hear me? I think she has disconnected. Maybe we wait a couple of seconds, and then we maybe start answering the part that we got. Can we get a signal if you're able to hear us? I think you have. Monica, I think you would have to reconnect. Then I think we take the next call and then give her a chance to, when she's back on the call, to get an answer. The next one would be Sebastian Asch from Financial Times. Sebastian, please.

Speaker #12: OK. Did you finish your question? Hello? Can you hear me?

Speaker #13: I think she has disconnected. So maybe we'll wait a couple of seconds and then we maybe start answering the part that we got.

Speaker #3: Being on the competitive technological level, but also cost competitive with the Chinese competitors—this helps us to enter Southeast Asia, for example, as well as the Middle East and India.

Speaker #12: Can we get a signal if you're able to hear us?

Speaker #3: But at the end, also Africa. And in the Western Hemisphere. This footprint from China helps us to speed up and build the right offer for the Western world.

Speaker #13: I think you have Monica. I think you would have to reconnect. Yeah. Then I think we take the next call and then give her a chance to when she's back on the call to get an answer.

Speaker #3: We were restricted because of regulations to use Chinese software, and therefore, we have made a clear differentiation between the two worlds. But now we have the flexibility, and we are having the right products for the right region to fulfill customer expectations.

Speaker #13: So the next one would be Sebastian Ash from Financial Times. Sebastian, please.

Sebastian Asch: Hi there. Hope you can hear me. I actually would have liked to follow on from Monica's questions, but I mean, I would ask the same thing when it comes to the Middle East, when it comes to potential for, you know, rising material costs in particular. I mean, what have you seen in Q1, and how do you expect that to develop over the course of the year? I mean, is there any potential that we can see this have an impact on the price of vehicles at the end?

Speaker #15: Hi, there. Hope you can hear me. I actually would have liked to follow on from Monica's questions. But I mean, I would ask the same thing when it comes to the Middle East when it comes to potential for rising material costs in particular.

Speaker #3: But also the right cost structure.

Speaker #2: Understood. Thank you.

Tom Narayan: Understood. Thank you.

Speaker #1: Thank you, Tom. And we move on to the next question, which comes from José Azumendi from JP Morgan. José, please go ahead.

Arno Antlitz: Thank you, Tom. We move on to the next question, which comes from Jose Asumendi from J.P. Morgan. Jose, please go ahead.

Rolf Woller: Thank you, Tom. We move on to the next question, which comes from Jose Asumendi from J.P. Morgan. Jose, please go ahead.

Speaker #15: I mean, what have you seen in the first quarter? And how do you expect that to develop over the course of the year? I mean, is there any potential that we can see this have an impact on the price of vehicles at the end?

Speaker #4: Thank you all. Good morning, Ollie and Arno. A couple of questions. Ollie, can you speak a bit about your tech stack that you have in China?

José Asumendi: Thank you, Rolf. Morning, Oli and Arno Antlitz. A couple of questions. Oli, can you speak a bit about your tech stack that you have in China? Thank you very much for the Capital Markets Day you recently did. I'd like to understand a bit better which parts of that tech stack and know-how that you're building in China you can actually bring back to Europe, or maybe which suppliers you think you could even co-collaborate closer in Europe to improve the cost competitiveness and bring that tech stack into European businesses. Clearly, the products you're launching in China are, some of them clearly superior to what you're offering in Europe.

Speaker #4: Thank you very much for the couple of markets that you recently did. I'd like to understand a bit better which parts of that tech stack and know-how you're building in China.

Speaker #15: And then I think the other element that I would touch on in terms of plant utilization and talks with Chinese companies or producing your own Chinese vehicles in European factories is that we heard again in the investor call that you're a supporter of local content rules, the industrial accelerator act.

Sebastian Asch: I think the other element that I would touch on in terms of plant utilization and talks with Chinese companies or producing your own Chinese vehicles in European factories is that, you know, we heard again in the investor call that you're a supporter of local content rules, the Industrial Accelerator Act. How would that work together with Chinese production in your factories? Do you see that as complementary, or is there any friction between those two positions? Thank you.

Speaker #4: You can actually bring back to Europe, or maybe, which suppliers you think you're going to collaborate closer with in Europe to improve the cost competitiveness and bring that tech stack into the European businesses.

Speaker #4: Clearly, the projects launching in China are, some of them, clearly superior to what you're offering in Europe. Also interested, please, in hearing if you will be open to opening up your production sites, your capacity in Europe, to your partners ACIC or FAW—ACIC or FAW.

Speaker #15: How would that work together with Chinese production in your factories? Do you see that as complementary? Or is there any friction between those two positions?

José Asumendi: Also interested, please, in hearing if you will be open to open up your production sites, your capacity in Europe to your partners, SAIC or Volkswagen or FAW. Second question, Arno Antlitz, can you talk a bit about the margin progression on your Brand Group Progressive? Do you think there's a chance to see a sequential margin improvement in Q2 versus Q1 in the light of the improved earnings in Q1? Thank you.

Speaker #15: Thank you.

Speaker #4: And second question, Arno, can you talk a bit about the margin progression on your progressive brand? Do you think there's a chance to see sequential margin improvement in Q2 versus Q1 in the light of the improved earnings in the first quarter?

Speaker #12: Yeah. May I start? And Monica also touched this question. And I hope she's connected again. To be very clear, today, we haven't got a concrete plan to share capacities with a Chinese partner.

Oliver Blume: Yeah. May I start? Monica also touched this question, and I hope she's connected again. To be very clear, today, we haven't got a concrete plan to share capacities with a Chinese partner, and there are no activities. Yeah. We are talking about only options, and these options are with clear priorities. The first priority would be to think about an own Volkswagen product. We have designed, engineered, and we are producing in China to make a localization here in Europe. First of all, we have to ramp up the new product in China. As if you have mentioned, the huge momentum we are bringing now to the market has to be executed. Yeah.

Speaker #4: Thank you.

Speaker #2: José, on the one hand side, we can benefit from the innovation speed. And from China. Which we can transfer also the process knowledge. But especially the cost work we have done what we presented last week was a cost reduction of 40 to 50 percent depending on the platform.

Oliver Blume: Jose, on the one hand side, we can benefit from the innovation speed and from China, which we can transfer also the process knowledge, but especially the cost work we have done. What we presented last week was a cost reduction of 40% to 50%, depending on the platform. All these measures, and that's a great opportunity, we can implement right now on our Western platforms, which has already been kicked off. On the other side, all activities we are doing there also with our component business, Arno Antlitz talked before, and suppliers in terms of hardware. We can benefit in terms of sourcing because knowing the right partners there and the best solutions, that's an opportunity.

Speaker #12: And there are no activities. We are talking about only options. And these options are with clear priorities. And the first priority would be to think about a own Volkswagen product we have designed, engineered, and we are producing in China.

Speaker #2: And all these measures. And that's a great opportunity. We can implement right now on our Western platforms. Which is already has already been kicked off.

Speaker #12: To make a localization here in Europe. But first of all, we have to ramp up the new products in China. And if you have mentioned the huge momentum we are bringing now to the market, it has to be executed.

Speaker #2: And on the other side, all activities we are doing there also with our component business, as Arno talked about before, and suppliers in terms of hardware.

Speaker #12: And for this year and the next year, we have a lot of work to bring all this to life. We are talking about 20 new models this year.

Oliver Blume: For this year and the next year, we have a lot of work to bring all this to life. We are talking about 20 new models this year and overall 30 new models by the end of 2027. Step by step, and being very clear on this, no activities right now to partner in Europe in terms of capacities. We'll do it for the next steps. In terms when we have decided where we want to reduce capacities, then we are thinking about the options we do have, and there defense could be a part, but also own products from China. Step after step.

Speaker #2: We can benefit in terms of sourcing because knowing the right partners there, and the best solutions, that's an opportunity. And for software, we will be more restrictive because we are developing our own software for the Western world.

Oliver Blume: In software, we will be more restrictive, because developing our own software for the Western world, but innovations and speed and processes helps a lot. Overall, having been in China last week, the media feedback was great. We got the by far biggest media feedback to reach of all companies, including the Chinese companies there in China. That has shown the great response and how well our products are received in the market. In terms of capacities, we always look for intelligent solutions. As you have seen, in terms of Dresden or, we are now in good negotiations for Osnabrück, for example, with defense companies. That's one approach.

Speaker #12: And overall, 30 new models by the end of 2027. And so step by step and being very clear on this no activities right now to partner in Europe in terms of capacities.

Speaker #2: But innovations and speed and processes help a lot overall. And having been in China last week, the media feedback was great. We got by far the biggest media feedback and reach of all companies.

Speaker #12: We will do it for the next steps. In terms of when we have decided where we want to reduce capacities, then we are thinking about the options we do have.

Speaker #12: And there defense could be a part, but also own products from China. But step step after step, but the positive way of thinking is that now we as a global player have the opportunities to benefit what we are doing in China.

Speaker #2: Including the Chinese companies there in China, and that has shown the great response and how well our products are received in the market. In terms of capacities, we always look for intelligent solutions, as you have seen in terms of Dresden, or we are now in good negotiations for Osnabrück, for example.

Oliver Blume: The positive way of thinking is that now we as a global player have the opportunities to benefit what we are doing in China in terms of innovation, in terms of processes, and at the end, also in terms of products, we could have the opportunity not only for the Global South, which is our first priority from China to Asia Pacific, Middle East, India, South America, and Africa. Europe is a maybe step for the upcoming years, but not decided.

Speaker #12: In terms of innovation, in terms of processes, and at the end also in terms of products we could have the opportunity not only for the Global South, which is our first priority from China, to Asia Pacific, Middle East, India, South America, and Africa.

Speaker #2: With defense companies—that's one approach. And the other approach, we also will check if there are opportunities for our Chinese cars in Europe, or for opening this for partnering, maybe with our partners.

Oliver Blume: The other approach, we also will check if there are opportunities for our Chinese cars in Europe, or for opening this for partnering maybe with our partners we do have in China. We haven't taken a decision, but the solution field is flexible. This is always a clever solution to reduce capacities in terms of changing this to a different owner, like defense company or sharing capacities with other business opportunities, right? The second option at the end, that's the worst one and most costly one, is to close a plant. We will go on this topic very openly.

Speaker #12: And Europe is a maybe step for the upcoming years, but not decided. Yeah. And since it's a lot of interest there, we'll give a little bit more details on Middle East.

Oliver Blume: The other approach, we also will check if there are opportunities for our Chinese cars in Europe, or for opening this for partnering maybe with our partners we do have in China. We haven't taken a decision, but the solution field is flexible. This is always a clever solution to reduce capacities in terms of changing this to a different owner, like defense company or sharing capacities with other business opportunities, right? The second option at the end, that's the worst one and most costly one, is to close a plant. We will go on this topic very openly.

Arno Antlitz: Yeah. Since it's a lot of interest there, we'll give a little bit more details on Middle East. First and foremost, direct effect, on our cost, for example, shipping and transport, it's about EUR 20 to 30 million burden a month. This is what we currently see due to the higher cost of fuel. On raw material cost and others, we have quite some good hedging in 2026. There we expect a lower burden, but obviously hedging, it doesn't last forever. We expect there some rising costs. We don't see so far second round effects, but obviously we cannot rule out that some of the materials we buy, some of our materials, our suppliers buy plastics, chemicals, others become more expensive.

Speaker #12: First and foremost, direct effect. On our cost, for example, shipping and transport, it's about 20% to 30 million burden a month. This is what we currently see due to the higher cost of fuel.

Speaker #2: We do have in China, we haven't taken a decision. But the solution field is flexible. And this is always a clever solution to reduce capacities, in terms of changing this to a different owner.

Speaker #12: On raw material costs and others, we have quite some good hedging in 2026. So there we expect a lower burden. But obviously, hedging doesn't last forever.

Speaker #2: Like defense company, or sharing capacities with other business opportunities. And the second option at the end—and that's the worst one and most costly one—is to close a plant.

Speaker #12: So we expect there some rising costs. We don't see so far a second round effect. But obviously, we cannot rule out that some of the materials we buy, some of our materials our suppliers buy plastics, chemicals, others, become more expensive.

Speaker #2: But we will go on this topic very, very openly.

Speaker #1: Yeah, José, in terms of margin, we expect and we need to step up in margin. Our guidance is four to five and a half percent.

Arno Antlitz: Yeah, Jose, in terms of margin, we expect and we need a step up in margin. Our guidance is 4% to 5.5%. We currently reported at 3.3%, and we want to achieve a reported margin within that guideline. We have also some promising results. Look at Brand Volkswagen. Yes, they are more closer to zero currently, but if you take into account the write-off for the ID.4 in US, they are at 3.5% currently running. We have a typical seasonality in our business that Q3, and sorry, Q2 and specifically Q4 are normally stronger than the first quarter. It is also a good chance for Audi. Audi now have a refreshed portfolio.

Speaker #12: In terms of demand, we have about 50% to 100,000 sales in the region. Obviously, there's a risk. It's less than 1%, but it's nevertheless important for our premium brands.

Arno Antlitz: In terms of demand, we have about 50,000 to 100,000 sales in the region. Obviously, there's a risk. It's less than 1%, but it's nevertheless important for premium brands. Demand overall, as said, we cannot rule out there's a headwind. The overall market in the first 3 months is down about 4% total market, mainly due to China. We cannot rule out that the outlook of the year will worsen if the conflict and the closure of the Hormuz stays. This is what we prepare for on the cost side. We have to prepare for these kind of disruptions and make Volkswagen more robust.

Speaker #1: We are currently reported at 3.3. And we want to achieve a reported margin within that guideline. And we have also some promising results. Look at Brand Volkswagen.

Speaker #12: And demand overall, as said, there we cannot rule out there's a headwind. The overall market in the first three months is down about 4% total market.

Speaker #1: Yes, they are closer to zero currently. But if you take into account the write-off for the ID.4 in the US, they are at 3.5 percent currently running.

Speaker #12: Mainly due to China. And we cannot rule out that the outlook of the year will worsen if the conflict and the closure of the Hormuz stays.

Speaker #1: And we have a typical seasonality in our business, that Q2 and specifically Q4 are normally stronger than the first quarter. And it's also a good chance for Ollie. Ollie have a refreshed portfolio; they are currently trading at 4.2.

Speaker #12: And this is what we prepare for on the cost side. We have to prepare for this kind of disruptions and make Volkswagen more robust.

Arno Antlitz: They are currently trading at 4.2. They expect 6 to 8 with a lot of product momentum coming, specifically, S and RS models, which are really doing very well in order intake. Last but not least, we really drive forward the restructuring measures throughout the whole group. You saw the fixed cost improvement Q1 EUR 1 billion, obviously we want to continue that. That should just give also more tailwind. We have to a little bit cautious now. We will ramp up the BEVs in H2 of the year, which are margin dilutive. Yes, there might be some economic headwinds from the conflict in the Middle East.

Speaker #13: OK. Thank you very much. I can see Monica, you're back on the call. I believe you first question has been answered about Chinese partnerships.

Pietro Zollino: Okay. Thank you very much. I can see, Monica, you're back on the call. I believe your first question has been answered about Chinese partnerships. The second one we didn't get.

Speaker #1: They expect six to eight, with a lot of product momentum coming specifically as RS models, which are really doing very well in order intake.

Speaker #13: The second one we didn't. Unfortunately, you broke up. You want to start with the second one?

[Journalist]: Yes, it has.

[Journalist]: Unfortunately, you broke up. You wanna start with the second one?

[Journalist]: No, I think it's been tackled already, by my colleague. I just wanted to raise my hand to say I'm back, and I appreciate you waiting and then answering the question.

Speaker #1: And last but not least, we really drive forward the restructuring methods throughout the whole group. You saw the fixed cost improvement first quarter billion and obviously we want to continue that.

Speaker #1: No. I think it's been tackled already. By my colleague, I just wanted to raise my hand to say I'm back. And I appreciate you waiting and then answering the question.

Speaker #13: OK. No problem. Good. Then I would say next one could be Christian Müskens from FAZ. Christian, can you hear us?

Pietro Zollino: Okay. No problem. Good. I would say, next one could be Christian Mückens from FAZ. Christian, can you hear us?

Speaker #1: The chips should give us also more tailwind. We have to be a little bit cautious. We will ramp up the BVs in the second half of the year, which are margin dilutive.

Speaker #14: Hello?

Christian Mückens: Hello? Hello.

Speaker #13: Yeah. Hello. Please go ahead.

Pietro Zollino: Yeah. Hello. Please go ahead. Okay. Okay. Okay. Because I saw you on the list. Good.

Speaker #14: Entschuldigung, darf ich meine Fragen wurden beantwortet. Ich hätte mich sonst gemeldet. Vielen Dank.

Speaker #1: And yes, there might be some economic headwinds from the conflict in the Middle East. But all in all, taking this into account, we still are fully underway to achieve our guidance of four to 5.5 percent.

Speaker #13: OK. OK. OK. Because I saw you on the list. Good. Then OK. That's fine. That's a good sign if we answered all the questions already.

Christian Mückens: Okay.

Christian Mückens: Okay, that's fine. That's a good sign if we answered all the questions already. Seems to be the right ones. The next in line would be Lutz Meier from Capital.

Arno Antlitz: All in all, taking this into account, we still are fully underway to achieve our guidance of 4% to 5.5%, and confirm the guidance.

Speaker #13: It seems to be the right ones. Then the next in line would be Lutz Meyer from Kapital.

Speaker #1: And confirm the guidance.

Lutz Meier: Hello? Hello.

Speaker #15: Hello. Hello.

Speaker #2: Super. Thank you.

Pietro Zollino: Hello. Hello.

Speaker #13: Hello. Go ahead, please.

José Asumendi: Super. Thank you.

Speaker #15: Hello. Thank you for taking my question. I'm referring to something Arno Antlitz mentioned earlier in the analyst's call. He said that you are calculated with the burden of 400 to 500 million for CO2 costs in Europe.

Lutz Meier: Hello.

Speaker #1: Thank you, José. And we will continue with Horst Schneider from Bank of America. Horst, please go ahead.

Pietro Zollino: Go ahead, please.

Arno Antlitz: Thank you, Jose. We will continue with Horst Schneider from Bank of America. Horst, please go ahead.

Rolf Woller: Thank you, Jose. We will continue with Horst Schneider from Bank of America. Horst, please go ahead.

Lutz Meier: Thank you for taking my question. I am referring to something Arno Antlitz mentioned earlier in the analyst call. He said that you are calculated with the burden of EUR 400 to 500 million for CO2 costs in Europe, and you have to calculate against the margin dilution of the model. First of all, I would like to know the EUR 400 to 500 million, is that per year in this three-year period which is running currently? The second is, maybe you can elaborate a bit how you calculate the trade-off. To which amount of BEV models you have to sell to lower this potential burden, and how are you dealing actually with. Maybe also to what extent still the BEV margins are below the ICE margins.

Speaker #3: Yes, thank you. And good morning, team. Good morning, Ollie. Good morning, Arno. The first question that I have relates to the impact on consumer demand coming from the high oil price.

Horst Schneider: Yes, thank you, and good morning, team. Good morning, Oli. Good morning, Arno. The first question that I have that relates to the impact on consumer demand coming from the higher oil price. Since you are the largest, one of the largest car makers of the world, clearly the market share monster in Europe, think you can maybe best answer this question. It's not just about Q1 average, it's more about latest trends that you have seen since the oil price spiked. What shift do you see in terms of demand shift from ICE to BEV, down trading in segments, differences as premium versus mass, and also between diesel and gasoline? That's question block number one.

Speaker #15: And you have to calculate against the margin delusion of the model. So first of all, I'd like to know the 400 to 500 millions.

Speaker #3: Since you are one of the largest carmakers in the world, and clearly the market share leader in Europe, I think you might be best positioned to answer this question.

Speaker #3: And it's not just about Q1 average. It's more about the latest trends that you have seen since the oil price spiked. So what shift do you see in terms of demand shift from ICE to BEV?

Speaker #15: Is that per year in this three-year period, which is running currently? And the second is maybe you can elaborate a bit how you calculate this trade-off.

Speaker #3: Down trading in segments? Differences is premium versus mass? And also between diesel and gasoline. So that's question block number bit following up to that what also José has asked on if you are prepared to share plans with Chinese OEMs.

Speaker #15: So to which amount of BV models you have to sell to lower this potential burden? And how are you dealing actually with and maybe also to what extent still the BV margins are below the ICE margins?

Horst Schneider: The number 2 is a little bit following up to that, what also Jose has asked on if you are prepared to share plans with Chinese OEMs. This seems to become kind of industry trend. We heard that also Stellantis wants to do that. Seems that several car makers are thinking about that. I just want to get then your view on the European outlook more in general. Isn't that a bad sign for Europe? Because in the way the industry is opening up the market to the Chinese competition, opening up to a wolf in sheep's clothing, potentially. Is the outlook from here that Europe can just get worse, the competition is heating up, and that the incumbents lose more market share? Thank you.

Speaker #3: This seems to become kind of industry trends. So we heard that also Stellantis wants to do that. So seems that several carmakers are thinking about that.

Speaker #3: And I just want to get then your view on the European outlook more in general. Isn't that a bad sign for Europe because in a way the industry is opening up the market to the Chinese competition?

Speaker #15: Because Arno Antlitz mentioned they are pretty much higher now. But it's still not the same level, if I categorize. Thank you very much. Yeah.

Lutz Meier: Arno Antlitz mentioned, they are pretty much higher now, but it is still not the same level, if I categorize. Thank you very much.

Speaker #3: Opening up to evolve in cheap closing, potentially. So, is the outlook from here that Europe can just get worse? The competition is heating up, and that's the incumbents losing more market share?

Arno Antlitz: Yeah. To be a little bit more precise on that, we expect a miss of the CO2 targets also on the 3-year period, 2025, 2026, 2027. One reason is we expect a really a very positive feedback and ramp-up of the ID.2 family. Then later on, ID.1, also very promising car, but they come late 2026 and 2027. We expect a miss of EUR 400 to 500 million CO2 costs per year. Basically almost EUR 1.5 billion over the 3-year period. The obvious question for you is why don't you just sell more electric cars? We must really expect the fact that we have to sell more the cars, more electric cars than the natural demand in Europe is.

Speaker #15: To be a little bit more precise on that, we expect that a miss of the CO2 targets also on the three-year period at 25%, 26%, , 27%.

Speaker #3: Thank you.

Speaker #1: Yeah, Horst. I’ll start. We had, just like two days ago, a discussion: what is your department called?

Arno Antlitz: Yeah, Horst, I start with, we had just like two days ago a discussion. Rolf, what is your department called Volkswagen?

Speaker #15: One reason is we expect really a very positive feedback and ramp-up of the ID2 family. And then later on, ID1 also very promising car.

Speaker #15: But they come late 26% and 27%. So we expect a miss of 300 to 400 to 500 million CO2 costs per year. So basically, almost 1.5 billion over the three-year period.

Speaker #2: The economics.

Oliver Blume: The economics.

Rolf Woller: The economics.

Speaker #1: The economic team, they showed us all the risks, and they did some really great scenarios on how long the conflict lasts. What has been full prices in different scenarios, and yes, there might be a headwind coming up in terms of overall market demand.

Arno Antlitz: Economic team.

Oliver Blume: Economic department, yeah.

Arno Antlitz: They showed us all the risks, and they did some really great scenarios on how long the conflict lasts, what has been fuel prices in different scenarios. Yes, there might be a headwind coming up in terms of overall market demand. But you ask, and then put another say, we'll include that in their total market guidance. What we currently see within us, we don't see these effects right now. We have a strong order book. Yes, March was a little bit weaker, but still strong. What we specifically saw, January, February, we saw a little bit more pressure on the residual values of the BEVs, and that turned in March, which is really positive.

Speaker #15: And so the obvious question for you is, why don't you just sell more electric cars? We must really expect the fact that we have to sell more of the cars at more electric cars than the natural demand in Europe.

Speaker #1: But you ask, and then Stanford and others—they will include that in their total market guidance. But what we currently see within us, we don't see these effects right now.

Speaker #15: So we have to help these cars with prices that put us into a situation that the margin is much lower than in combustion engine cars.

Arno Antlitz: We have to help these cars with prices that put us into a situation that the margin is much lower than in combustion engine cars. We make a trade-off between money we lose due to the CO2 fine and money we lose to the margin loss of the BEV. This is our responsibility, and this is currently where we stand. The obvious solution is improve the margin of the BEVs. This is what we heavily work on. The first generation, like the ID.3, they have really a very weak margin. Next generation, we call it MEB+, has a much better margin configuration margin. You know, they get an LFP battery. The great cars were introduced so far. Just yesterday, we saw the ID. Polo.

Speaker #1: We have a strong order book. Yes, March was a little bit weaker, but still strong. And what we specifically saw in January and February was a little bit more pressure on the residual values of the BVs, and that turned in March.

Speaker #15: So we make a trade-off between money we lose due to the CO2 fine and money we lose due to the margin loss of the BVs.

Speaker #15: This is our responsibility. And this is currently where we stand. So the obvious solution is improve the margin of the BVs. This is what we heavily work on.

Speaker #1: Which is really positive. And in total we see more I would say demand for BVs or interest in BVs. Let me put it that way.

Arno Antlitz: In total, we see more, I would say demand for BEVs or interest in BEVs. Let me put it that way. Although ICE and BEV order intake both increased. Yeah, this is where we currently stand. Of course, we cannot rule out that there are headwinds. We prepare for them on the cost side. We are cautious on pro-capacity, what Oliver said. We don't wanna end up with being like on the inventory side, above ideal stock. We carefully monitor that, but we don't see major effects so far in Europe, on.

Speaker #15: The first generation, like the ID3, they have really a very weak margin. Next generation we call it MEP+. It has a much better margin.

Speaker #1: Although ICE and BV order intake both increased, yeah, this is where we currently stand. Of course, we cannot rule out that there are headwinds.

Speaker #15: For the delusion margin, they get an LFP battery that great cars were introduced so far, just yesterday. We saw the ID Polo. And if you compare for example, the ID Cross, ID2 Cross, with the T-Cross, which is a combustion engine car, the margin is much, much closer.

Speaker #1: We prepare for them on the cost side. We are cautious on capacity, as Oliver said. And we don't want to end up on the inventory side above ideal stock.

Arno Antlitz: If you compare, for example, the ID. Cross, ID.2 Cross with the T-Cross, which is a combustion engine car, the margin is much, much closer, 70% to 80% already, but still not on the same level. We expect the margin, the fully comparable margin only with our future platform, SSP. This is why we concentrate on developing that. Until the time when this platform arrive, we have to make sound trade-offs between BEV volumes and CO2 fines.

Speaker #15: 70% to 80% already. But still not on the same level. We expect the margin, the fully comparable margin only with our future platform SSP.

Speaker #1: We carefully monitor that, but we don't see a major effect so far in Europe.

Speaker #15: This is why we concentrate on developing that. And until the time, when this platform arrives, we have to make sound trade-offs between batch volumes and CO2 fines.

Speaker #3: Arno, just quick follow-up. When you talk about rising bath demand, I wonder if that is in the end then positive or negative for Volkswagen.

Speaker #3: You potentially save rebates that you don't have to provide anymore. But you also lose profitable ICE cars. So, what's the net equation? Is that positive or negative if both demand is increasing?

Speaker #13: OK. I can see one more question. Rachel, you're waiting as well. Rachel from Thomson Reuters.

Pietro Zollino: Okay, I can see one more question. Rachel, you're waiting as well. Rachel from Thomson Reuters.

Speaker #1: No, this is a great question. Currently, we are on the balance. That means we have a margin dilution on the BV side. But we still expect full year to book four to five hundred million.

Arno Antlitz: No, this is a great question. Currently, we are on the balance. That means, we have a margin dilution on the BEV side, but we still expect full year to book EUR 400 to 500 million on burden because we don't achieve our CO2 targets. More demand means more margin dilution. On the other hand, less burden on the CO2 regulation. Net-net, if we were to significantly increase our BEV share, that would be a margin dilution going forward, which is what we always said. Structurally, we must distinguish between 3, I would say, technology platforms. One is the MEB platform. For example, in our volume brand, we run currently ID.3, ID.4.

Speaker #16: Yes. Good morning. Thanks for connecting.

[Journalist] (Thomson Reuters): Yes. Good morning. Thanks for taking my question.

Pietro Zollino: Good morning.

Speaker #13: Good morning.

[Analyst]: I wanted to ask, you said improving utilization is a key lever to Atlas. I wanted to ask what this means for the Zwickau plant. Are you planning similar defense partnerships there, like in Osnabrück, or can you share any other plans for Zwickau? I wanted to ask if you can give any specifics on streamlining the product platform. Are there any models that you have that will be discontinued, any brands that will be affected in particular or synergies? Any detail there, if you can, please.

Speaker #16: I wanted to ask, you said improving utilization is a key lever. Mr. Antlitz, I wanted to ask what this means for the tickle plant.

Speaker #16: Are you planning similar defense partnerships there, like in Osnabrück? Or can you share any other plans for Zwickau? And then I wanted to ask if you can give any specifics on streamlining the product platforms.

Speaker #1: On burden because we don't achieve our CO2 targets. So more demand means more margin dilution. On the other hand, less burden on the CO2 regulation.

Speaker #16: So are there any models that you have that will be discontinued? Any brands that will be affected in particular or synergies? Any detail there if you can, please?

Speaker #1: But net net, if we were to significantly increase our bath share, that would be a margin dilution. Going forward. Which is what we always said.

Speaker #1: Structurally, we must decide we must distinguish between three, I would say, technology platforms. One is the MAB platform, for example, in our volume. Brand, we run currently ID3, ID4.

Speaker #15: Yeah, Rachel. All of us speaking. And let me start with defense. First of all, we want to close the solution for the Osnabrück plant.

Oliver Blume: Yeah, Rachel, Oliver speaking, let me start with defense. First of all, we want to close the solution for the Osnabrück plant, and this will give us a bit of feeling how does it work. Up to now, it's very constructive with a positive perspective what we could do there. At the end, we know about the need of the defense industry, and they're being very clear. Volkswagen won't go at the end for weapons. No, that's clear. We are providing our experience of serial production, automation, and so on, which is very useful for the defense industry. Our knowledge is more on military transport or safety systems.

Speaker #15: And this will give us a bit of feeling how does it work up to now. It's very constructive. And with a positive perspective, what we could do there.

Speaker #1: And now, with the arrival of the ID.2 family, comes an MEB Plus, which has an LFP battery cell to pack. Next generation for electric trains.

Arno Antlitz: Now with the arrival of the ID.2 family comes an MEB+, which has an LFP battery, cell to pack, next generation for electric trains. There, the margin dilution effect is still there, but it's smaller. You know, the ID.2 for us is much closer to the T-Roc. This is, we have to take into account. But until we implement our next generation SSP platform, the margin dilution effect will continue. Smaller than today, but it will continue.

Speaker #1: So there the margin dilution effect is still there. But it's smaller. The ID2. Ross is much closer to the T-Roc. And so we have to take into account but until we implement our next generation SSP platform, the margin dilution effect will continue.

Speaker #15: And at the end, we know about the need of the defense industry. And there being very clear, Volkswagen won't go at the end for weapons.

Speaker #15: That's clear. We are providing our experience of serial production automatization and so on, which is very useful for the defense industry. And our knowledge is more on military transport or safety systems.

Speaker #1: Smaller than today, but it will continue.

Speaker #3: Okay. Thank you.

Horst Schneider: Okay. Thank you.

Speaker #1: And Horst, good morning. Let me come to your second question situation in Europe. We expect tougher competition in the next years, especially from the Chinese.

Oliver Blume: Horst, good morning. Let me come to your second question, situation in Europe. We expect a tougher competition in the next years, especially from the Chinese car manufacturers, we see ourselves well prepared. First of all, we have a great product momentum. Order intake is increasing both on ICE and BEV. We are by far market leader for both. The new products we kicked off 3 years ago are now entering into the market. The Polo and there are others. One example, others also in the BEV segment. Arno mentioned also the product momentum at Audi with S and RS models.

Oliver Blume: For the next step, and there in Zwickau, we have made some decisions for the upcoming years with our agreement we closed at the end of 2024. We are going for recycling in Zwickau. We have done a reduction of the capacity technically, and the same for other German plants. We will enter into the next steps in terms of solution finding. Yeah, no decisions are taken, but defense is interesting, and we will have the first experience there.

Speaker #15: Then for the next step, and there in Zwickau, we have made decisions for the upcoming years with our agreement. We closed at the end of '24.

Speaker #1: Car manufacturers. But we see ourselves well prepared. First of all, we have a great product momentum. Order intake is increasing, both on ICE and BEVs.

Speaker #15: And so we are going for recycling in Zwickau. We have done a reduction of the capacity technically. And the same for other German plants.

Speaker #15: And then we will enter into the next steps in terms of solution finding. No decisions taken. But defense is interesting. And we will have the first experience there.

Speaker #1: We are by far the market leader for both. And the new products we kicked off three years ago are now entering the market. The Polo and the Royal are one example.

Speaker #15: In terms of products, we have the clear intention to reduce the number of our products worldwide. Double digit percentage. And also to reduce the options.

Speaker #1: But others are also in the BEV segment, and Arno mentioned also the product momentum at Audi with S and RS models. So first, we are counting on our own strengths.

Oliver Blume: In terms of products, we have the clear intention to reduce the number of our products worldwide, double-digit percentage, and also to reduce the options by reducing complexity and also reducing our capital investment on this and making our structures cleaner and also providing for our customers a clearer profile with our products. We have already started this process, and the products which will come to the market right now, for example, the Polo or the Cupra Raval, have already benefit from these activities, and we will continue to do so. Today, we won't announce any concrete thinkings. We have concepts already, step by step, we will announce where we want to go.

Oliver Blume: On first, we are counting on our own strengths, while keeping with our cost initiatives, to have at the end more profit with our products. Second approach is what we will check is what own China products could fit for the European market, especially in segments where we are not present right now. That depends at the end on tariffs, on logistic costs and so on, if we see opportunities there. Because we are now in a positive situation having own Chinese products, which are very attractive to the customers. Third approach is at the end for capacities to check if we could share capacities with Chinese partners. I'm saying this very clear.

Speaker #15: By reducing complexity, y, and also reducing our capital investment on this. And making our structures cleaner. And also providing for our customers a clearer profile with our products.

Speaker #1: While keeping with our cost initiatives, to have at the end more profit with our product. Second approaches, what we will check is what's owned.

Speaker #15: We have already started this process. And the products which will come to the market right now, for example, the Polo or the Cupra Raval, have already benefit from this activities.

Speaker #1: China products could fit for the European market, especially in segments where we are not present. Right now. But that depends at the end on tariffs.

Speaker #15: And we will continue to do so. Today, we won't announce any concrete thinkings we have concepts already. And then step by step, we will announce where we want to go.

Speaker #1: On logistic costs and so on. If we see opportunities there. Because we are now in a positive situation having owned Chinese products. Which are very attractive to the customers.

Speaker #15: But clear goal overall is complexity reduction, cost reduction, investment reduction, and being more focused. And at the end, having more and better products customer size for the different regions of the world.

Oliver Blume: Clear goal overall is complexity reduction, cost reduction, investment reduction, and being more focused and at the end, having more and better products, customer size for the different regions of the world.

Speaker #1: And third approaches, at the end for capacities, to check if we could share capacities with Chinese partners. But saying this very clear, first approach is what we are doing right now in Osnabrück.

Oliver Blume: Our first approach is what we are doing right now in Osnabrück, is being in contact with the defense industry. That's also very intelligent to solve overcapacities with this manner. On the other side, to protect or bringing more or equal competitiveness in Europe, we have a clear position in terms of Made in Europe. Companies who make business here in Europe should have an European footprint. Yeah. Therefore, we are in contact also with the European Commission, the Made in Europe initiative, making progress. I think this will bring the market situation and the competition in Europe to a more fair trade situation. Yeah.

Speaker #1: Is being in contact with the defense industry. That's also very intelligent to solve overcapacities with this manner. On the other side, to protect or bringing more or equal competitiveness in Europe, we have a clear position in terms of made in Europe.

Speaker #13: OK. Thank you all for your excellent questions. I think this concludes the Q&A session. And we are now also at the end of our call.

Pietro Zollino: Okay. Thank you all for your excellent questions. I think this concludes the Q&A session, and we are now also at the end of our call. If anything was left unanswered, as Rolf also mentioned during the investors and analyst call, please contact us. In Rolf's book here, drop us a note, call us, and I can only wish you all a pleasant week and stay safe, and looking forward to hear you next time. Thanks.

Speaker #13: If anything was left unanswered, as Rolf also mentioned during the investors and analysts call, please contact us in Wolfsburg here. Drop us a note, call us.

Speaker #1: Companies who make business here in Europe, should have an European footprint. And therefore, we are in contact also with the European Commission. The made in Europe initiatives making progress.

Speaker #1: And so I think this will bring the market situation and the competition in Europe to a more fair trade trade situation. And that's also important because we are faced another region of the world.

Oliver Blume: That's also important because we are facing other regions of the world, these restrictions.

Speaker #1: These restrictions—and this is more a European interest policy. It's not protection. But I think we need it. And the companies who are investing in Europe can benefit.

Arno Antlitz: This is more a European interest policy. It's not protection, but I think we need it and to so the companies who are investing in Europe can benefit.

Oliver Blume: This is more a European interest policy. It's not protection, but I think we need it and to so the companies who are investing in Europe can benefit.

Speaker #3: Okay. Great. Also, as a German citizen, I keep my fingers crossed for you—that you master all these challenges. All the best.

Horst Schneider: Okay, great. As a German citizen, I keep the fingers crossed for you that you master all these challenges. All the best.

Speaker #1: Thank you, Horst. And we continue with Michael Ponset from the Z Bank. Michael, please go ahead.

Rolf Woller: Thank you, Horst. We continue with Michael Punzet from DZ Bank. Michael, please go ahead.

Speaker #4: Yes, Michael Ponset. Good morning. I have one question regarding a report of the Handelsblatt from last week. Mentioning that you have to increase your net liquidity so far.

Michael Punzet: Yes. Michael Punzet. Good morning. I have one question regarding a report of the Handelsblatt from last week, mentioning that you have to increase your net liquidity. So far, you gave us a target of roughly 10% of revenues. Can you give us any indication for the new target and maybe also the topics which you need to increase net liquidity and if this have any impact on upcoming dividend payments?

Speaker #4: You gave us a target of roughly 10% of revenues. Can you give us any indication for the new target? And maybe also the topics where you need to increase net liquidity, and if this has any impact on upcoming dividend payments?

Speaker #1: Yeah. Michael. Look, I give you a little bit of color. Overall, we want to make sure that in the transformation we have a really strong balance sheet.

Arno Antlitz: Yeah. Michael, look, I give you a little bit of color. Overall, we wanna make sure that in the transformation, we have a really strong balance sheet and rating is really important for us. This is not the only reason, but another reason why we are focused on improving our result, on improving our net cash flow. Net liquidity, we said always at least 10% of revenue. If you look into the industry, others have a even stronger balance sheet. Going forward, it is clear that we want to improve our operative result and the cash conversion rate with more discipline and being more disciplined on R&D, and that's driving also our cash conversion rate.

Speaker #1: And rating is really important for us. And so this is not the only reason. But what another reason why we are focused on improving our result on improving our net cash flow.

Speaker #1: So net liquidity, we said always at least 10% of revenue. But if you look into the industry, others have an even stronger balance sheet.

Speaker #1: And going forward, it is clear that we want to improve our operative result and the cash conversion rate with more disciplined and being more disciplined and then on R&D.

Speaker #1: And that's driving also our cash conversion rate. And so, although it's too early to discuss it, let's assume we achieve that. We are rather confident, very confident, that we achieve that.

Arno Antlitz: Although it's too early to discuss it, but let's assume we achieve that. We are rather confident, very confident that we achieve that. It's a question, how, what are potential ways to use that cash flow? One net cash flow is obviously let's strengthen our net liquidity position and our balance sheet. Another possibility is or means is, let our shareholder participate on a much stronger Volkswagen. Third, we have also hybrid bonds. We look into potentials there. This is why we said 10% of revenue is the minimum we wanna keep. With a stronger Volkswagen going forward in uncertain world, we potentially also want to increase that.

Speaker #1: Then it's a question, how can—what are potential ways to use that cash flow? And one net cash flow is obviously that strengthening our net liquidity position and our balance sheet.

Speaker #1: Another possibility is, or means, is to let our shareholders participate in a much stronger Volkswagen. And third, we have also hybrid bonds. We look into potentials there.

Speaker #1: And this is why we said 10% of revenue is the minimum. We want to keep. And with a stronger Volkswagen going forward in uncertain world, we potentially also want to increase that.

Speaker #3: Okay. Thank you. Maybe a short follow-up. You mentioned the sale of Bugatti Rimac. Will this have also no impact on your industrial net cash and all this stuff?

Michael Punzet: Okay. Thank you. Maybe a short follow-up. You mentioned the sale of Bugatti Rimac. Will this have also no impact on your industrial net cash and all this stuff or will you have a different accounting compared with Porsche?

Speaker #3: Or will you have a different accounting compared with Porsche?

Speaker #1: No, no. That will also strengthen our balance sheet. Because Porsche is fully consolidated in the group.

Arno Antlitz: No, no. That will also strengthen our balance sheet because Porsche is fully consolidated in the group.

Speaker #3: No, I mean, yesterday Porsche said that the book gain and also the cash inflow from that deal will not have any impact on the automotive division.

Michael Punzet: No, yesterday, Porsche said that the book gain and also the cash inflow from that deal will not have any impact on the automotive distribution. Is it the same as at your level?

Speaker #3: Is that the same as at your level?

Arno Antlitz: This positive effect on a cash flow at Porsche will be, since we are fully consolidated, also a positive net cash flow on group level.

Speaker #1: This positive effect on the net cash flow at Porsche will be, since we are fully consolidated, also a positive net cash flow on group level.

Arno Antlitz: This positive effect on a cash flow at Porsche will be, since we are fully consolidated, also a positive net cash flow on group level.

Speaker #3: Okay.

Michael Punzet: Okay.

Speaker #1: Thank you, Michael. And we continue with Christian Freines from Goldman Sachs. Christian, please go ahead.

Rolf Woller: Thank you, Michael. We continue with Christian Dahlhaus from Goldman Sachs. Christian, please go ahead.

Speaker #5: Goldman Sachs. Most of my questions have been answered. I just have a question on pricing. Your pricing for passenger cars and light commercial vehicles was up in the quarter.

Christian Dahlhaus: Goldman Sachs. Most of my questions have been answered. Just, I have a question on pricing. Your pricing for passenger cars and light commercial vehicles was up in the quarter. Could we look into that a little bit more, specifically within EU pricing, given emerging Chinese OEMs localization efforts? You mentioned, I think, the minimum pricing discussions between the EU and China. How do you expect, you know, pricing to evolve throughout the rest of the year, in this year? What impact do you think the minimum pricing discussions will have on that?

Christian Frenes: Goldman Sachs. Most of my questions have been answered. Just, I have a question on pricing. Your pricing for passenger cars and light commercial vehicles was up in the quarter. Could we look into that a little bit more, specifically within EU pricing, given emerging Chinese OEMs localization efforts? You mentioned, I think, the minimum pricing discussions between the EU and China. How do you expect, you know, pricing to evolve throughout the rest of the year, in this year? What impact do you think the minimum pricing discussions will have on that?

Speaker #5: Could we look into that a little bit more? Specifically within EU pricing. Given emerging Chinese OEMs, localization efforts, and you mentioned, I think, the minimum pricing discussions between the EU and China.

Speaker #5: How do you expect pricing to evolve throughout the rest of the year in 20 in this year and what impact do you think the minimum pricing discussions will have on that?

Speaker #5: And then secondly, just also sticking with pricing, looking at China, thanks for your capital markets day event and we just had the Beijing Motor Show where we saw a lot of the impressive product you have coming.

Christian Dahlhaus: Secondly, just also sticking with pricing, looking at China, thanks for your Capital Markets Day event, and we just had the Beijing Motor Show, where we saw a lot of the impressive product you have coming, and also your strategy and targets. Could you comment a little bit about your expectations for China pricing again for the remainder of the year this year? Thank you.

Speaker #5: And also your strategy and targets. But could you comment a little bit about your expectations for China pricing again for the remainder of the year this year?

Speaker #5: Thank you.

Speaker #1: Yeah, thanks for the question. Obviously, we cannot make public discussions on what prices we plan and what we expect. What we can say, and what we prepare for, is that competition is clearly increasing.

Arno Antlitz: Yeah. Thanks for the question. Obviously, we cannot make that public, discussions on what prices we plan and what we expect. What we can say and what we prepare for, the competition is clearly increasing. You know, Chinese competitors are bringing their cars to Europe, and they're also basically exporting the competitive pressure to Europe. What we see in our EBIT bridge, we saw pretty strong movement based on our really good product substance and our portfolio. You saw pricing was even slightly positive in Q1 with EUR +0.2 billion. Of course, we have to take into account the negative mix basically from the ramp-up of the BEVs.

Speaker #1: Chinese competitors are bringing their cars to Europe, and they're also basically exporting the competitive pressure to Europe. What we see in our EBIT bridge is that we saw pretty strong movement based on our really good product substance.

Speaker #1: And our portfolio you saw pricing was even slightly positive in the first quarter with 0.2 billion. Of course, we have to take into account the negative mix.

Speaker #1: Basically, from the ramp-up of the VVs, in total we expect more pressure. But this is also why we compensate on the cost side in order to be prepared.

Speaker #1: On the cost level. We have great products. We have good technology. And we have to have the committed cost base and this is what we work on.

Speaker #5: Yeah. And maybe to China, we have seen during the last two years an average decline of 15% in pricing. And we don't expect that the pricing level will come back to where it has been years ago.

Oliver Blume: Yeah. Maybe to China, we have seen during the last 2 years an average decline of 15% of pricing. We don't expect that the pricing level will come back to where it has been years ago. Margin improvement will come only over tough cost work. Yeah. This process has already been kicked off. We have shown you an cost improvement of 40% to 50% depending on our platforms in China, and we will continue to do so. Yeah. The same what we are doing there is our task in Europe to being more competitive in terms of pricing while having the opportunity improving margin.

Arno Antlitz: Yeah. Maybe to China, we have seen during the last 2 years an average decline of 15% of pricing. We don't expect that the pricing level will come back to where it has been years ago. Margin improvement will come only over tough cost work. Yeah. This process has already been kicked off. We have shown you an cost improvement of 40% to 50% depending on our platforms in China, and we will continue to do so. Yeah. The same what we are doing there is our task in Europe to being more competitive in terms of pricing while having the opportunity improving margin.

Speaker #5: So margin improvement will come only over tough cost work. And this process has already been kicked off. We have shown you an cost improvement of 40 to 50% depending on our platforms in China.

Speaker #5: And we will continue to do so. And the same, what we are doing there, is our task in Europe: to be more competitive in terms of pricing.

Speaker #5: While having the opportunity and improving margin. And then maybe as a quick follow-up, not much is being said about your supply chain or Middle East—and that's in line with the rest of the industry, I would add.

Christian Dahlhaus: Maybe as a quick follow-up, not much was being said about your supply chain or Middle East, and that's in line with the rest of the industry, I would add. When would you expect to have more clarity on 2027 regarding these issues? Thank you.

Christian Frenes: Maybe as a quick follow-up, not much was being said about your supply chain or Middle East, and that's in line with the rest of the industry, I would add. When would you expect to have more clarity on 2027 regarding these issues? Thank you.

Speaker #5: But if you—when would you expect to have more clarity on 2027 regarding these issues? Thank you.

Speaker #1: Yeah. Today, our supply chain is not affected. And also, in terms of raw materials, for example, we have hatching. What it would mean for 2027 is too early to predict.

Oliver Blume: Yeah. Today, our supply chain is not affected. Also in terms of raw materials, for example, I mean, all we have hedging. What would it mean for 2027 is too early to predict. Depends on the conflict. We don't know what will happen. But for 2026, you can be for sure that we won't be affected in terms of cost.

Arno Antlitz: Yeah. Today, our supply chain is not affected. Also in terms of raw materials, for example, I mean, all we have hedging. What would it mean for 2027 is too early to predict. Depends on the conflict. We don't know what will happen. But for 2026, you can be for sure that we won't be affected in terms of cost.

Speaker #1: Depends on the conflict. And we don't know what will happen. But for 2026, you can be for sure that we won't be affected. In terms of cost.

Speaker #5: Thank you.

Christian Dahlhaus: Thank you.

Christian Frenes: Thank you.

Speaker #6: Thank you, Christian. That brings us to the next question, which comes from Frank Biller from ABBW. Frank, please go ahead.

Arno Antlitz: Thank you, Christian. Brings us to the next question, which comes from Frank Biller from LBBW. Frank, please go ahead.

Rolf Woller: Thank you, Christian. Brings us to the next question, which comes from Frank Biller from LBBW. Frank, please go ahead.

Speaker #4: Yes, hello. Frank Biller from ABBW. Thanks for taking my question. It's about a possible divestment. Are you thinking about the Avalanche stake, or a floating of Traton, or are you also considering a divestiture—maybe a Ducati or Lamborghini IPO?

Frank Biller: Yes, hello. Frank Biller from LBBW. Thanks for taking my question. It's about a possible divestments, thinking about Everlence stake, or a floating of Traton. Are you also thinking of divest of maybe Ducati or Lamborghini IPO?

Speaker #1: No, we were very transparent about our plans for Avalanche, and we are pretty confident that this is really a very good process. And it's progressing well.

Arno Antlitz: No, I don't. We were very transparent about our plans for Everlence, and we are pretty confident that this is a really very good process, and it's progressing well. In Traton, we always said we don't rule out the next step. We wanna increase the free float. We made the first step. Also Traton made some steps, for example, in terms of Sinotruk. But these are the topics we decided on so far. We look at various alternatives for PowerCo. We open our capital structure there. Frank, please have understanding for that. We can only talk about topics like this once we have decided on.

Speaker #1: In Traton's case, we always said we don't rule out the next step. We want to increase the fleet float. We made the first step. Also, Traton made some steps, for example, in terms of Sinotruck.

Speaker #1: But these are the topics we decided on so far. We look at various alternatives for PowerCo. We open our capital structure there. But Frank, please have understanding for that.

Speaker #1: We can only talk about topics like this once we have decided on.

Speaker #5: But there is a clear intention that's part of our program for the next steps of transformation. To reorder our investment portfolio. That's very clear.

Oliver Blume: There is a clear intention that that's part of our program for the next steps of transformation to reorder our investment portfolio. That's very clear to reduce complexity. That, for example, why we kicked off last year the Bugatti deal at Porsche. That's one example. Many others we are working currently, but we won't go into details and speculations in terms of Ducati and Lamborghini. The activities are placed and we have clear priorities what we'll take first and then step by step. Overall, reducing complexity is our goal.

Speaker #5: To reduce complexity. And that's, for example, why we kicked off last year the Bugatti deal at Porsche. That's one example. Many others we are working on currently.

Speaker #5: But we won't go into details and speculations in terms of Ducati and Lamborghini. But the activities are placed, and we have clear priorities—what we will tackle first, and then step by step.

Speaker #5: But overall, reducing complexity is our goal.

Speaker #6: That's a good point. We always talk about Ducati and Lamborghini. These brands. We have 1,500 entities that we have in our books. Fully consolidated and not fully consolidated.

Arno Antlitz: It's a good point. We always talk about Ducati and Lamborghini, these brands. We have 1,500 entities that we have in our books, fully consolidated and not fully consolidated. We need to reduce that complexity. We have so many layers. We have a lot of entities, and we need to reduce that complexity in order to achieve the cost savings that we need to achieve in order to be competitive.

Speaker #6: And so we need to reduce that complexity. We have so many layers. We have a lot of entities. And we need to reduce that complexity in order to achieve the cost savings.

Speaker #6: That we need to achieve in order to be competitive.

Speaker #4: Yeah. Thank you.

Frank Biller: Yeah. Thank you.

Speaker #6: Thank you, Frank. And we move on to Steven Reitman. Steven, please go ahead.

Arno Antlitz: Thank you, Frank. We move on to Stephen Reitman. Steven, please go ahead.

Rolf Woller: Thank you, Frank. We move on to Stephen Reitman. Steven, please go ahead.

Speaker #7: Yes, good morning. In the final spot interview, in the article last week, there was also talk about reducing factor costs, which I think was said to be about €4,500 at the moment.

Stephen Reitman: Yes, good morning. In the Handelsblatt interview article last week, there was also talk about reducing factor costs, which I think was said to be about EUR 4,500 at the moment. You want to reduce that to EUR 3,000 in Europe. Could you comment on what the situation looks when you compare plants across Europe and how that also then compare to the situation in China and in other locations? Just give us some kind of rough feel for that. Thank you.

Speaker #7: And you want to reduce that to 3,000 euros. In Europe. Could you comment on what the situation looks when you compare plans across Europe and how that also then compares to the situation in China?

Speaker #7: And in other locations? Just give us some kind of rough feel for that. Thank you.

Speaker #1: Yeah. First of all, that hasn't been an— But talking about the figures, that's a direction we want to go to. And we are very confident that we have turned to the right direction right now.

Oliver Blume: First of all, that hasn't been in an interview in Handelsblatt. Talking about the figures, that's the direction we want to go to. We are very confident that we have turned to the right direction right now. The first results, having reduced our plant cost in Germany over 20% last year. That's massive. We haven't achieved this over the last 10 or 20 years, and this in one year, 20%. That's not the end.

Speaker #1: The first results I'm having reduced our planned cost in Germany by over 20% last year. That's massive. We haven't achieved this over the last 10 or 20 years.

Speaker #1: And this in one year. 20%. And that's not the end. Today we can say that our plans in Eastern and in Western Europe are competitive.

Oliver Blume: Today, we can say that our plants in Eastern and in Western Europe are competitive to all the others are acting in Europe. Therefore, we decided, for example, to bundle our urban car family in Spain and the ID.1 to come in Portugal on a very competitive plant level. In Germany, we still have work ahead, but also very clear measures to reduce. A plant cost level per car of around EUR 3,000 is a feasible level comparing to the competition. In China, the level of plant cost is even lower. That's clear because of labor costs and energy and everything around. This you can't compare with Europe.

Speaker #1: To all the others, are acting in Europe. And therefore we decided, for example, to bundle our urban car family in Spain and the ID.1 to come in Portugal.

Speaker #1: On a very competitive plant level, in Germany, we still have our work ahead. But also very clear measures to reduce, and so a planned cost level per car of around €3,000 is a feasible level compared to the competition.

Speaker #1: In China, they level of planned cost is even lower. That's clear. Because of labor cost and energy and everything around. But this you can't compare with Europe.

Speaker #1: And for us it's important to compare our situation in the different regions of the world. And there we can confirm in Europe already Western and Eastern on competitive level.

Oliver Blume: For us, it's important to compare our situation in the different regions of the world, and there we can confirm in Europe already, Western and Eastern, on competitive level. In Germany, still, work to do. On China, completely on a competitive level. Where we have also strong footprint in South America, we are working on a competitive level. Yeah. That's what we have to do. The 3,000, which was written there, is an average, like a goal to go to.

Speaker #1: In Germany still work to do. On China, completely on a competitive level. And where we have also strong footprint in South America we are working on a competitive level.

Speaker #1: And that's what we have to do. And the 3,000, which was written there, is an average—like a goal to go to.

Speaker #6: I just got a question—a follow-up question on my remark regarding the number of entities and layers. And I must confirm we are 100% convinced that we are the best owner of Lamborghini.

Arno Antlitz: We just got a question, a follow-up question on my remark on the number of entities and layers. I must confirm we are 100% convinced that we are the best owner of Lamborghini. Lamborghini is a integral part of Brand Group Progressive. There's a lot of synergies between the three brands there. That's not. Hopefully, you didn't kinda got it wrong. We clearly stick to the current setup in the Brand Group Progressive, including Lamborghini right now.

Speaker #6: Lamborghini is an integral part of brand group Progressive. There's a lot of synergies between the three brands there. And so let's not hopefully it didn't get it wrong.

Speaker #6: So, we clearly stick to the current setup in the brand group Progressive, including Lamborghini right now. Thank you, Arno, for that clarification. We have handling Cosman from Barclays, actually, who has difficulties with asking the question.

Rolf Woller: Thank you, Arno, for that clarification. We have Henning Heitmann from Barclays, actually, who has difficulties with asking the question. He wrote me an email and 2 questions. One is on, I think, Oliver Blume, can you update us on US localization? Is there a chance that localization would take Scout Motors into considerations? If we would localize, would that be compensated within the EUR 160 billion investment budget for 2026 to 2030, so in the current planning round? The second question is for Arno, update on Everlence. There are obviously short listed PE names, if you would like to comment on that, and capital allocation from proceeds of the potential sale of Everlence.

Speaker #6: So, he wrote me an email and two questions. One is on, I think, Oli, can you update us on U.S. localization? Is there a chance that localization would take Scout into consideration?

Speaker #6: And if we would localize, would that be compensated within the €160 billion investment budget for 2026 to 2030? So, in the current planning round.

Speaker #6: And the second question is for Arno. Update on Avalanche. There are obviously shortlisted PE names, if you would like to comment on that. And capital allocation from proceeds of the potential sale of Avalanche.

Speaker #6: If this is still true that this is in line with our current dividend policy. And if the potential Proceeds are included in the cash flow forecast.

Rolf Woller: If this is still true, that this is in line with our current dividend policy, and if the potential proceeds are included in the cash flow forecast.

Speaker #1: Yeah, let me start with the first question in terms of U.S. localization. With the Scout plant, we have great opportunities. We're making good progress. We are in line with our milestones.

Oliver Blume: Yeah. Let me start with the first question in terms of US localization. With the Scout plant, we have great opportunities, making good progress. We are in line with our milestones, and the capacity also provides opportunities for other brands of Volkswagen Group. We are not at the point today to communicate what are the concrete plans. In terms of more capacities in the US, we are still in contact with different states. At the end, this depends in order also support, we are getting there, and there stick to my position.

Speaker #1: And the capacity also provides opportunities for other brands of Volkswagen Group. But we are not at the point today to communicate what are the concrete plans.

Speaker #1: In terms of more capacities in the US we are still in contact with different states. But at the end this depends in terms also support.

Speaker #1: We are getting there. And there, I stick to my position. We can't do both—paying high tariffs on the one hand, and on the other hand, heavily invest in new capacities.

Oliver Blume: We can't do both, paying high tariffs, on the one hand side and on the other side, heavily invest in new capacities. There are some states interested in our investment, but at the end, the balance in between support and investment is important. We plan step by step. First, now ramping up the Scout capacities, maybe using them for other brands of Volkswagen Group and then thinking to the next step. Our goal is clear to improve the local footprint in the US, having the US as an opportunity market for the future.

Speaker #1: And so there are some states interested, and in our investment. But at the end, the balance between support and investment is important. And so we plan step by step.

Speaker #1: First, now ramping up the Scout capacities. Maybe using them for other brands of Volkswagen Group. And then thinking to the next step. But our goal is clear.

Speaker #1: To improve the local footprint in the US, having the US as an opportunity market for the future.

Speaker #6: And regarding Avalanche. Need just to say this is a great company with strong position in the market. Convincing strategy. And in consequence the interest is very strong.

Arno Antlitz: Regarding Everlence, needless to say, this is a great company with a strong position in the market, convincing strategy, and in consequence, the interest is very strong. I obviously cannot comment on specific steps of the process. What we said, we wanna sell the majority, and the process is very well underway. The potential process are not included in the cash flow. This is what we always made very clear. Please also have understanding of that we decide on the dividend towards the end of the year, taking all the factors into account, and this is then decided on by the Group Board and Management and Supervisory Board.

Speaker #6: I obviously cannot comment on specific steps of the process. What we said is we want to sell the majority, and the process is very well underway.

Speaker #6: The potential processes are not included in the cash flow. This is what we always made very clear. And please also have understanding that we decide on a dividend towards the end of the year.

Speaker #6: Taking all the factors into account and this is then decided on by the group board and management and supervisory board. And this is too early to commit on now.

Arno Antlitz: This is too early to commit on now, specificities on the dividend.

Speaker #6: Specificities on the dividend. Thank you, Arno. And Henning I hope this has answered all your questions. Coming to the last. Best for last. It would be Harald from Citi.

Rolf Woller: Thank you, Arno and Henning. I hope this has answered all your questions. Coming to the last, best for last, it would be Harald from Citi. Harald, please go ahead. Let me bring you up on stage. Now we should be able to hear.

Speaker #6: Harald, please go ahead. Let me bring you up on stage. And now we should.

Speaker #7: Rob, can you hear me okay?

Speaker #6: Yes. Yes. Now we can.

Oliver Blume: Yes. Yes. Now we can hear you.

Speaker #7: Perfect. Yeah. So slightly difficult question again. And I don't like the short-term ones. But interesting conversation in relation to Horst's question earlier with regard to IAA.

[Analyst] (Citi): Perfect. Yeah, so slightly difficult question again, and you know, I don't like the short-term ones. Interesting conversation in relation to Horst question earlier with regard to IAA. The market's largely ignored that. By the way, just wanted to congratulate you on the incredible work you're doing in, in what is, I think, the most challenging cycle that I have seen in this industry. As you know, I've been around probably as long as most of you. With relation to policy and IAA specifically, first question, how do you see the IAA impacting on the potential fleet sales for Chinese OEMs? How restrictive do you think the IAA Made in Europe policy might be?

Harald Hendrikse: Perfect. Yeah, so slightly difficult question again, and you know, I don't like the short-term ones. Interesting conversation in relation to Horst question earlier with regard to IAA. The market's largely ignored that. By the way, just wanted to congratulate you on the incredible work you're doing in, in what is, I think, the most challenging cycle that I have seen in this industry. As you know, I've been around probably as long as most of you. With relation to policy and IAA specifically, first question, how do you see the IAA impacting on the potential fleet sales for Chinese OEMs? How restrictive do you think the IAA Made in Europe policy might be?

Speaker #7: The market's largely ignored that. And by the way, just wanted to congratulate you on the incredible work you're doing in what is, I think, the most challenging cycle that I have seen in this industry.

Speaker #7: And as you know, I've been around probably as long as most of you. So, but with relation to policy and IAA specifically. First question.

Speaker #7: How do you see the IAA impacting the potential fleet sales for Chinese OEMs? How restrictive do you think the IAA 'Made in Europe' policy might be?

Speaker #7: I suspect you're closer to that than we are, and I'd love to understand that better, because I think there is some potential here. And then, secondly, same question but in relation to other policy.

[Analyst] (Citi): I suspect you're closer to that than we are, and I'd love to understand that better because I think there is some potential here. Secondly, same question, but with relation to other policy, you're seeing some German government now looking to subsidize industrial electricity. You've seen the EU protecting the steel industry much more carefully. To what degree should we hope? You know, I always want to hope, and I'm always disappointed. To what degree should we hope that the EU or the European governments will actually start to try to finally start to help this industry? Hope you understand where my question's coming from.

Harald Hendrikse: I suspect you're closer to that than we are, and I'd love to understand that better because I think there is some potential here. Secondly, same question, but with relation to other policy, you're seeing some German government now looking to subsidize industrial electricity. You've seen the EU protecting the steel industry much more carefully. To what degree should we hope? You know, I always want to hope, and I'm always disappointed. To what degree should we hope that the EU or the European governments will actually start to try to finally start to help this industry? Hope you understand where my question's coming from.

Speaker #7: You're seeing some German government now looking to subsidize industrial electricity. You've seen the EU protecting the steel industry much more carefully. To what degree should we hope?

Speaker #7: I always want to hope and I'm always disappointed. But to what degree should we hope that the EU or the European governments will actually start to try to finally, finally start to help this industry?

Speaker #7: So, I hope you understand where my question's coming from.

Speaker #1: Yeah. In terms of the made in Europe policy in from the European Commission. It hadn't been already fixed completely. But it is a European interest politic.

Oliver Blume: Yeah. In terms of the Made in Europe policy from the European Commission, it hadn't been already fixed completely. It is a European interest politic, which we support. This starts with a European production footprint, but then also to have different levels for components. Yeah. Therefore, this has to be carefully balanced. I also agree that at the end, the different regions could be comparable. What we see in other regions should happen in Europe, then you have a fair competition. Yeah. This has to be worked out.

Speaker #1: Which we support. And this starts with a European production footprint, but then also to have different levels for components. Yeah. And therefore, this has to be carefully balanced.

Speaker #1: And I also agree that, at the end, the different regions could be comparable. What we see in other regions should happen in Europe, and then you have a fair competition.

Speaker #1: Yeah. And this has to be worked out: hardware components, focusing also on battery cells and battery systems, but at the end also in electric electronics.

Speaker #1: What could be included. And we feel ourselves well prepared in Europe as a European player. And we expect there fair or better conditions in terms of trade comparing with the competition.

Speaker #1: Energy is a important point. And there I think it should be important to focus also on the most important industries for example the battery industry.

Speaker #1: Right now in Germany for example is excluded from the energy regulations. And that's for me a wrong decision. They have to expand the energy regulations also for battery brands because the battery industry is a crucial one for Germany and Europe.

Oliver Blume: They have to expand the energy regulations also for battery plants because the battery industry is a crucial one for Germany and Europe, and this has to be supported. All right. Battery manufacturing or production is high energy intensive and therefore I think they have to adapt the regulations. That's only one example. At the end, energy counts for all, also for the charging infrastructure. That's what we see in other regions of the world or where the energy is on a very low level. The customer is calculating and switching to battery electric vehicles. There we still have something to do, especially in Germany.

Speaker #1: And this has to be supported. Battery manufacturing or production is high energy intensive. And therefore I think they have to adapt the regulations. That's only one example.

Speaker #1: And at the end, energy counts for all. Also for the charging infrastructure. That's what we see in other regions of the world where the energy is on a very low level.

Speaker #1: So the customer is calculating and switching to battery electric vehicles. And there, we still have something to do, especially in Germany.

Speaker #7: Okay. Thank you.

[Analyst] (Citi): Okay. Thank you.

Harald Hendrikse: Okay. Thank you.

Speaker #6: Thank you, Harald. Thank you all, actually, for a very lively discussion. A lot to ask, a lot to debate. Clearly, you see that Volkswagen is moving ahead.

Oliver Blume: Thank you.

Rolf Woller: Thank you, Harald. Thank you all actually for a very lively discussion. A lot to ask, a lot to debate. Clearly, we see that Volkswagen is moving ahead. This concludes the Q&A session for the investor and analyst call for today. If anything was left unanswered, yeah, please contact the IR team here in Wolfsburg. They are really happy that you're keeping them employed. After a short break of about 5 minutes, we will then continue with the media Q&A at about, I would say, 10:40, 10:42, something like that. Thank you.

Speaker #6: This concludes the Q&A session for the investor and analyst call for today. If anything was left unanswered, please contact the R team here in Wolfsburg.

Speaker #6: They're really happy that you're keeping them employed. And after a short break of about five minutes, we will then continue with the media Q&A.

Speaker #6: At about I would say 10:40, 10:42 something like that. Thank you.

Speaker #1: We will now begin the Q&A session for our members of the media. As a reminder, to ask a question you will need to press star, one, and one.

Oliver Blume: We will now begin the Q&A sessions for members of the media. As a reminder, to ask a question, you will need to press star 1 and 1. Star 11 on your telephone. That's different than we had it in the previous call. Wait for your name to be announced, please. If you want to withdraw your question, it's the same procedure. Please press star 1 and 1. The first question comes from Frank Schwope from DPA. Please, Frank. I think we have an issue here. Maybe we will start with Christina Amann. Christina, you wanna start, please? Unfortunately, we can't hear you. There seems to be technical issues.

Oliver Blume: We will now begin the Q&A sessions for members

Speaker #1: So star 11 on your telephone is different than we had it in the previous calls. And wait for your name to be announced please.

Speaker #1: If you want to withdraw your question, it's the same procedure. Please press star one and one. And the first question comes from Frank Johansen from DPA.

Speaker #1: Please, Frank. Okay. I think we have an issue here. So then maybe we will start with Christina Amman. Christina, you want to start, please?

Speaker #1: Fortunately, we can't hear you. Okay, that seems to be technical issues. Okay. Hallo? Yeah, jetzt kann ich Sie hören?

Christina Amann: Hello?

Christina Amann: Okay.

Christina Amann: Hello?

Christina Amann: Hello. Yeah. It's

Speaker #8: Hi. Yes, now it works. There was something.

Christina Amann: Yes. Now it works.

Speaker #1: Perfect.

Oliver Blume: Oh.

Christina Amann: There was something.

Oliver Blume: Perfect.

Speaker #8: Okay. I got a few questions. The first thing Mr. Blume you talked about. I don't know. German or English?

Christina Amann: Okay. I got a few questions. The first thing, Mr. Blume, you talked about German or English?

Speaker #1: I think English, because we may have some English-speaking guests as well.

Oliver Blume: I think English because, I mean, we have maybe some English-speaking guests as well.

Speaker #8: Okay. You have talked about chances of talking to Chinese companies producing cars in European Volkswagen plants. Do you have any details on what kind of companies you're talking about?

Pietro Zollino: You have talked about chances talking to Chinese companies producing cars in European Volkswagen plants. Do you have any details what kind of companies you're talking about? What kind of plants you're talking about? Is there anything going on already or is that rather an option for the future? Would that be your existing partners like FAW, SAIC, or XPeng or would that be completely different companies? The second question is, have you already asked for refunds on the IEEPA tariffs and others which are deemed illegal in the US now? Do you expect anything? Do you expect a negative reaction from Trump? Third question is regarding the capacity. You really say capacity numbers in Europe. You said 500,000 should go. Would that be mostly brand Volkswagen? Would that be other brands? What about Porsche?

Speaker #8: What kind of plants are you talking about? Is there anything going on already, or is that rather an option for the future? Would that be with your existing partners like FAW, SAIC, or Xiaopeng?

Speaker #8: Or would that be completely different companies? The second question is: have you already asked for refunds on the EIPA tariffs and others which are deemed illegal in the US now?

Speaker #8: And do you expect anything? Do you expect the negative reaction from Trump? Third question is regarding the capacity utilization numbers in Europe. You said 500,000 should go.

Speaker #8: Would that be mostly the Volkswagen brand? Would that include other brands? What about Porsche? And do you have any figures on how many jobs would need to be cut already?

Christina Amann: Do you have any figures on how many jobs would need to be cut already? On what oil price are you, is your outlook based and, is there a risk of the outlook if the oil price is staying where it is right now? Thank you.

Speaker #8: And on what oil price is your outlook based? And is there a risk to the outlook if the oil price stays where it is right now?

Speaker #8: Thank you.

Speaker #1: Yeah. Ms. Amman, good morning. Then I will take the first and the third question, and maybe Arno can answer the refunds and the oil pricing.

Oliver Blume: Yeah. Ms. Amann, good morning. I will take the first and the third question, and maybe Arno can answer the refunds and the oil pricing. Chinese companies in Europe, we have clear priorities in adapting capacities. For example, in Osnabrück, we are in constructive talks with defense industry. Yeah, that's a first approach because there's a big need and I think this is good also great support from Volkswagen to our interest in Germany and for the NATO to support with our knowledge of automation and the qualification of our people, first of all. We haven't kicked off any thinking about Chinese products or partners to work in Europe.

Speaker #1: Chinese companies in Europe we have clear priorities in adapting capacities. And for example in Osnabrück we are in constructive talks with defense industry. Yeah.

Speaker #1: That's first approach because there's a big need and I think this could also a great support from Volkswagen. To our interest in Germany and for the NATO to support with our knowledge of automatization and the qualification of our people.

Speaker #1: First of all then we haven't kicked off any thinking about Chinese products or partners. To work in Europe. If we would do it in our activities of adapting capacities we would start with our own products from REFE province.

Oliver Blume: If we would do it in our activities of adapting capacities, we would start with our own products from Hefei province, Volkswagen products. Second step could be Volkswagen products from our joint venture partners we are working together. That's the priorities, but we haven't kicked off because at the end we need the free capacities. Now, today, the plants in Germany are saturated with product and at the end, this is part of the transformation plan we would have. In terms globally and to say once again, the steps we have taken. We come from a invested footprint of over 12 million units.

Speaker #1: For example products. Then second step could be Volkswagen products from our joint venture partners. We are working together. And that's the priorities but we haven't kicked off because at the end we need the free capacities.

Speaker #1: Today the plants in Germany are saturated with products. And at the end this is part of the transformation plan we would have. In terms globally and to say once again the steps we have taken.

Speaker #1: We come from an invested footprint of over 12 million units. Then we have already reduced 1 million in China 1 million in Europe. The next 500,000 are agreed in China.

Oliver Blume: Then we have already reduced 1 million in China, 1 million in Europe. The next 500,000 are agreed in China. Coming to a level of 9 million, which I explained before in the investors call. We are working now to check where we do have the opportunities. That's Germany and Europe. Overall, we have the production cost per car to come to an average level of EUR 3,000, which is competitive in Europe. Now, that's our primary goal. Then we are coming with flexible approaches to achieve this. This 9 million level is not what we are expecting in the market. Our plans in the market are more ambitious in terms of sales.

Speaker #1: So, coming to a level of 9 million—which I explained before in the investors' call—we are working now to check where we do have the opportunities.

Speaker #1: That's Germany and Europe. Overall, we have the production cost per car come to an average level of €3,000, which is competitive in Europe.

Speaker #1: Yeah. That's our primary goal. And then we are coming with flexible approaches to achieve this. Yeah. And this 9 million level is not what we are expecting in the market.

Speaker #1: Our plants in the market are more ambitious. In terms of sales, that’s more to bring us into a better situation and, on the other side, bringing down our break-even level.

Oliver Blume: That's more to bring us in a better situation and, on the other side, bringing down our break-even level. That's the intention. Handing over to Arno.

Speaker #1: That's the intention. And then handing over to Arno.

Speaker #2: Yeah, the remaining two questions very quick. In terms of refunds of tariffs, there are audit tariffs still in place; they are not changed.

Arno Antlitz: The remaining two questions very quick. In terms of refunds of tariffs, all the tariffs are still in place. They are not changed. There are some minor refund possibilities, for example, for parts, not vehicles. Obviously, if we have the chance to get a refund, we have to fight for that. But it's more like a small double-digit EUR million in the magnitude. This compares to the EUR 4 to 5 billion headwind, just to give you an idea. In terms of oil price outlook, I talked on that already in the investor call. Our direct headwind is about EUR 20 to 30 million for fuel per month.

Speaker #2: And there are some minor refund possibilities. For example for parts not vehicles. And obviously if we have the chance to get refund we have to fight for that.

Speaker #2: But it's more like a small double-digit million in magnitude. And this compares to the $4 to $5 billion headwind, just to give you an idea. And in terms of oil price outlook, I talked on that already in the investor call.

Speaker #2: Our direct headwind is about 20 to 30 million for fuel per month. In terms of demand we see still a strong demand in the first quarter.

Speaker #2: Both for ICE and BV vehicles. We cannot rule out that the total demand overall will be there's might be some headwinds depending on how long the closure of the Strait of Hormuz will continue.

Speaker #2: So we prepare for a potential more headwind going on. But so far, we don't see an impact on order intake in Europe.

Speaker #1: Okay, thanks, both. Frank, we believe in second chances. Frank from DVA, want to try again?

Pietro Zollino: Okay. Thanks both. Frank, we believe in second chances. Frank from DPA. You wanna try again?

Speaker #3: Let me know.

Frank Schwope: Can you hear me now?

Speaker #1: Yes. Perfect. Go ahead.

Pietro Zollino: Yes. Perfect. Go ahead.

Speaker #3: Perfect, okay. Actually, two follow-up questions to the last question from the colleague. The first one: if you want to reduce €500,000 additionally in Europe, does it mean primarily in Germany, or is it not still decided?

Frank Schwope: Perfect. Okay, actually two follow-up questions to the last question from the colleague. First one, if you want to reduce 500,000 additionally in Europe, does it mean primarily in Germany, or is it not still decided? Will that work without closure of plants in Germany or Europe? Especially, of course, in Germany. The second question, facing Osnabrück, the NOZ newspaper today reported that you are in advanced talks with Rafael or Dynamit Nobel, which is part of Rafael, about the production facilities in Osnabrück and the plant. The newspaper says there's already a letter of intent which was signed. Can you confirm that? Can you tell any details what's planned there? Yes. Thank you.

Speaker #3: And will that work without closure of plants in Germany or Europe? Especially of course in Germany. And the second question facing Osnabrück the NOZ newspaper today reported that you are in advanced talks with Rafael or Dynamite Nobel which is part of Rafael about the production facilities in Osnabrück and the plant.

Speaker #3: And the newspaper says there's already a letter of intent which is signed. Can you confirm that? Can you tell any details what's planned there?

Speaker #3: Yes. Thank you.

Speaker #1: We have announced that we want to come to a feasible production footprint of 9 million cars. That’s what we have sold on average during the last five years.

Oliver Blume: We have announced that we want to come to a feasible production footprint of 9 million cars. That's what we have sold per average during the last 5 years. Our ambition in terms of sales is higher, we think to be on the safe side and improving our breakeven situation, that would be the feasible one. Talking about Osnabrück. As I mentioned already, our talks are advanced already. We do not comment the partners we are dealing with. Overall, I think we feel ourselves as an experienced company in terms of automization and with very qualified people, also in the responsibility for the goals of the German government for the country protection.

Speaker #1: Our ambition in terms of sales is higher. But we think to be on the safe side and improving our break even situation that would be the feasible one.

Speaker #1: And talking about Osnabrück, as I mentioned already, our talks are advanced already. We do not comment on the partners we are dealing with. Overall, I think we feel ourselves as an experienced company in terms of automatization, with very qualified people.

Speaker #1: Also in the responsibility for the goals of the German government for the country's protection. And this, from our part, is also to provide, to stabilize democratization in Germany.

Oliver Blume: This from our part is also to provide to stabilize democratization in Germany. Therefore, I think it's a win-win situation at the end to adapt plant capacities and on the other side, support the goals of the German government and European governments in terms of NATO.

Speaker #1: Therefore, I think it's a win-win situation in the end: to adapt plant capacities and, on the other side, support the goals of the German government and European governments in terms of NATO.

Speaker #4: Okay. I hope this answers the question. Next in line would be Lazar Baković from Handelsblatt. Lazar, please, the line is yours.

Pietro Zollino: Okay. I hope this answers the question. Next in line would be Lazar Backovic from Handelsblatt. Lazar, please. Line is yours.

Speaker #5: Robert Blume: And thank you, Arno Antlitz. You mentioned your plant costs during the investor call, and repeated here your goal is to reach €3,000 in Europe.

Lazar Backovic: Thank you, Arno Antlitz. You mentioned your plant costs during the investor call and repeated here your goal is to reach EUR 3,000 in Europe. You are conducting reviews at your German plants. Can you tell us where you stand in Q1 2026 and whether you met your cost targets there at your key plants? That will be the first question. The second would also be on Chinese vehicles and Chinese VW models which could possibly build in Europe. I mean, technically, they are based on a different platform on the CSP. Will this platform be localized for Europe? Can you comment on that?

Speaker #5: You are conducting revenues at your German plants. Can you tell us where you stand in the first quarter of 2026, and whether you met your cost target there at your key plants?

Speaker #5: That would be the first question. And the second would also be on Chinese vehicles and Chinese VW models which could possibly build in Europe.

Speaker #5: I mean, technically they are based on a different platform on the CSP, so will this platform be localized for Europe? Can you comment on that?

Speaker #1: Yeah. Mr. Baković we have a clear goal that we want to achieve. We make progress in the German plants by 20 percent which is significant last year.

Arno Antlitz: Yeah, Mr. Backovic, we have a clear goal that we wanna achieve. We make progress near, in the German plants, by 20%, which is significant last year. We have still a long way to go to be cost competitive and obviously, we have to pull all the levers. Productivity, and this is also why we discuss the topic of capacity, no? The Chinese are coming to Europe, building also factories which are highly efficient, and we cannot compete with underutilized plants. The improving the utilization is a key lever to make our German plants competitive. This is why we continue to work also on improving the utilization.

Speaker #1: But we have still a long way to go. To be cost competitive and obviously we have to pull all the levers. Productivity and this is also why we discussed the topic of capacity.

Speaker #1: The Chinese are coming to Europe building also factories which are highly efficient and we cannot compete with underutilized plants. So improving the utilization is a key lever to make our German plants competitive.

Speaker #1: And this is why we continue to work also on improving the utilization.

Speaker #2: And in terms of Chinese platforms, I talked before only about options. And today, it's too early to decide if we want to localize a Chinese platform in Germany.

Oliver Blume: In terms of Chinese platforms, I talked before only about options. Today it's too early to decide if we want to localize a Chinese platform in Germany. Our priority would be, first of all, Well, if we would do it, to take one of our own platforms first. Because this year we are ramping up the CMP platform and the ramp up for the CSP is planned for 2027 in China. This work has to be done first, then we could think about options in Europe. On the other side, also to check which products could be the right ones.

Speaker #2: But our priority would be first of all when we if we would do it to take one of our own platforms first. Because this year we are ramping up the CMP platform.

Speaker #2: And the ramp up for the CSP is planned for 2027 in China. And this work has to be done first and then we could think about options in Europe.

Speaker #2: And on the other side, also, to check which products could be the right ones, we are getting right now the feedback and response from the market for our first new products in China.

Oliver Blume: We are getting right now the feedback and response from the market for our first new products in China, and there are many more to come. At the end, we will decide, depending on the success we have in China, which model would fit in Europe, especially in segments where we are not present with our current portfolio in Europe. Step by step. It's too early and we haven't kicked off the process and we haven't taken a decision.

Speaker #2: And there are many more to come. And then at the end, we will decide, depending on the success we have in China, which model would fit in Europe.

Speaker #2: Especially in segments where we are not present with our current portfolio in Europe. And so, step by step, but it's too early and we haven't kicked off the process, and we haven't taken a decision.

Lazar Backovic: Quick or short follow-up because it was in the question. The Q1 2026, you did meet your cost targets in the plants or not? Can you not comment on that?

Speaker #5: Quick or short follow-up, because it wasn't the question. So, in the first quarter of 2026, did you meet your cost targets in the plants or not?

Speaker #5: Or can you not comment on that?

Speaker #1: No. We are on track to improve. We have still a target gap last year and we make progress. But it's too early to give you an indication for 2026.

Arno Antlitz: No, we are on track to improve, no? We have still a target gap last year, then we make progress.

Arno Antlitz: But it's too early to give you an indication for 2026.

Speaker #1: But being very, very clear the progress we are doing and I personally from production we have never seen a progress but we have seen last year.

Operator: Okay.

Oliver Blume: Being very, very clear, the progress we are doing, and personally from production, we have never seen a progress what we have seen last year. Yeah. Over 20% is massive. We haven't seen this 10 or 20 years before. There was more or less, in terms of production cost, a compensation of inflation with our productivity work. This 20% is also compared to the competition, a massive progress. Being very clear on this, and we are continuing on this path, and we know how to do it.

Speaker #1: Over 20 percent is massive. And we haven’t seen this in 10 or 20 years before. There was, more or less in terms of production cost, a compensation of inflation with our productivity work.

Speaker #1: And this 20 percent is also compared to the competition a massive progress. Being very clear on this and we are continuing on this path and we know how to do it.

Speaker #1: Okay. Very well.

Pietro Zollino: Thank you, Oliver.

Pietro Zollino: Okay. Very well.

Speaker #4: Thanks, Lazar. So I see Bloomberg is next in line. Monica, good to have you on the call. Can you please take the mic?

Pietro Zollino: Thanks, Lazar. I can see Bloomberg is next in line. Monica, good to have you on the call. Can you please take the mic?

Speaker #4: Very good. Yeah. Very good.

Pietro Zollino: Good morning. Can you hear me all right?

Pietro Zollino: Very good. Yeah, very good.

Speaker #6: Wonderful. Thanks so much. I guess I would just expand on some of the questions surrounding Chinese partnerships. And how those could potentially be leveraged in European plants.

Speaker #6: Mr. Blume have you discussed the possibility of Chinese partnerships with labor leaders? And I'm wondering how they have reacted to this option? How far along would these talks be?

Speaker #6: And I guess on the labor side are there certain red lines or concrete conditions of such a partnership? And then my second question would focus mostly on what's happening in the Middle East.

Speaker #6: I know the fallout so far has been limited specifically when it comes to deliveries in the region. But we know that the conflict has raised energy and shipping costs in the short term.

[Journalist] (Bloomberg): We know that the conflict has raised energy and shipping costs in the short term, and GM was already saying that it is seeing higher costs across the board from aluminum and steel.

Speaker #6: And GM was already saying that it's seeing higher costs across the board from aluminum and steel.

Speaker #1: Okay. Did you finish your question? Hello? Can you hear me?

Oliver Blume: Okay. Did you finish your question? Hello? Can you hear me?

Speaker #4: I think she has disconnected. So maybe we'll wait a couple of seconds and then maybe start answering the part that we got.

Pietro Zollino: I think she has disconnected. maybe we wait a couple of seconds, we maybe start answering.

Pietro Zollino: Yeah.

Pietro Zollino: The part that we got.

Speaker #1: Can we get a signal if you're able to hear us?

Oliver Blume: Can we get a signal if you're able to hear us?

Speaker #4: I think you have Monica I think you would have to reconnect. Yeah. Then I think we take the next call and then give her a chance to when she's back on the call to get an answer.

Pietro Zollino: I think you have. Monica, I think you would have to reconnect. Yeah. I think we take the next call and then give her a chance, when she's back on the call, to get an answer. The next one would be Sebastian Ash from Financial Times. Sebastian, please.

Speaker #4: So the next one would be Sebastian Ash from Financial Times. Sebastian, please.

Speaker #7: Hi there. Hope you can hear me. I actually would have liked to follow on from Monica's questions. But I mean, I would ask the same thing when it comes to the Middle East, when it comes to potential for rising material costs in particular.

Speaker #7: I mean what have you seen in the first quarter? And how do you expect that to develop over the course of the year? I mean is there any potential that we can see this have an impact on the price of vehicles at the end?

Speaker #7: And then I think the other element that I would touch on, in terms of plant utilization and talks with Chinese companies or producing your own Chinese vehicles in European factories, is that we heard again in the investor call that you're a supporter of local content rules, the Industrial Accelerator Act.

Speaker #7: How would that work together with Chinese production in your factories? Do you see that as complementary or is there any friction between those two positions?

Speaker #7: Thank you.

Speaker #1: Yeah. May I start? And Monica also touched this question. And I hope she's connected again. To be very clear, today we haven't got a concrete plan to share capacities with a Chinese partner.

Oliver Blume: May I start? Monica also touched this question, and I hope she's connected again. To be very clear, today, we haven't got a concrete plan to share capacities with a Chinese partner, and there are no activities. We are talking about only options, and these options are with clear priorities. The first priority would be to think about a own Volkswagen product we have designed, engineered, and we are producing in China, to make a localization here in Europe. First of all, we have to ramp up the new product in China. If you have mentioned, the huge momentum we are bringing now to the market has to be executed.

Speaker #1: To make a localization here in Europe. But first of all, we have to ramp up the new products in China. And as you have mentioned, the huge momentum we are bringing now to the market has to be executed.

Speaker #1: And for this year and the next year, we have a lot of work to bring all this to life. We are talking about 20 new models this year.

Oliver Blume: For this year and the next year, we have a lot of work to bring all this to life. We are talking about 20 new models this year and overall 30 new models by the end of 2027. Step by step, and being very clear on this, no activities right now to partner in Europe in terms of capacities. We will do it for the next steps. In terms when we have decided where we want to reduce capacities, then we are thinking about the options we do have. There, defense could be a part, but also own product from China. Step after step.

Speaker #1: And overall, 30 new models by the end of 2027. And so, step by step, and being very clear on this—no activities right now to partner in Europe in terms of capacities.

Speaker #1: We will do it for the next steps. In terms of when we have decided where we want to reduce capacities, then we are thinking about the options we do have.

Speaker #1: And their defense could be a part, but also own products from China. But step by step, after step, the positive way of thinking is that now we, as a global player, have the opportunities to benefit from what we are doing in China.

Oliver Blume: The positive way of thinking is that now we as a global player have the opportunities to benefit what we are doing in China in terms of innovation, in terms of processes, and at the end, also in terms of products, we could have the opportunity not only for the Global South, which is our first priority from China to Asia-Pacific, Middle East, India, South America, and Africa. Europe is a maybe step for the upcoming years, but not decided.

Speaker #1: In terms of innovation, in terms of processes and at the end also in terms of products, we could have the opportunity not only for the Global South—which is our first priority from China to Asia Pacific, Middle East, India, South America, and Africa—and Europe is a maybe step for the upcoming years.

Speaker #1: But not decided.

Speaker #7: Yeah. And since it's a lot of interest there we'll give a little bit more details on Middle East first and foremost direct effect. On our cost for example shipping and transport it's about 20 to 30 million burden a month.

Arno Antlitz: Yeah. Since it's a lot of interest there, we'll give a little bit more details on Middle East. First and foremost, direct effect on our cost, for example, shipping and transport, it's about EUR 20 to 30 million burden a month. This is what we currently see due to the higher cost of fuel. On raw material costs and others, we have quite some good hedging in 2026, so there we expect a lower burden. Obviously, hedging, it doesn't last forever, so we expect there some rising costs. We don't see so far second-round effects, obviously, we cannot rule out that some of the materials we buy, some of our materials, our suppliers buy, plastics, chemicals, others.

Speaker #7: This is what we currently see due to the higher cost of fuel. On raw material costs and others, we have quite some good hedging in 2026.

Speaker #7: So there we expect a lower burden. But obviously, hedging doesn't last forever, so we expect some rising costs. We don't see, so far, second-round effects.

Q1 2026 Volkswagen AG Earnings Call - Media Q&A

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