Segment reporting

Segments are identified by looking to the Volkswagen Group’s internal management and reporting. In line with its multibrand strategy, each of the Group’s brands is managed by its own board of management. The Group targets and requirements laid down by the Board of Management of Volkswagen AG or the Group Board of Management must be complied with to the extent permitted by law. Starting with fiscal year 2011, the segment reporting comprises the four reportable segments of Passenger Cars and Light Commercial Vehicles, Trucks and Buses, Power Engineering and Financial Services.

The activities of the Passenger Cars and Light Commercial Vehicles segment cover the development of vehicles and engines, the production and sale of passenger cars and light commercial vehicles, and the corresponding genuine parts business. The individual passenger car brands and light commercial vehicles of the Volkswagen Group are combined on a consolidated basis into a single reportable segment.

Due to the initial consolidation of the MAN Group and the associated addition of MAN ’s commercial vehicles business, the Scania Vehicles and Services segment was renamed “Trucks and Buses” in fiscal year 2011. This primarily comprises the development, production and sale of heavy commercial vehicles and buses, the corresponding genuine parts business and related services.

The activities of the new “Power Engineering” segment that was created by the initial consolidation of the MAN Group in fiscal year 2011 consist of the development and production of large-bore diesel engines, turbo compressors, industrial turbines and chemical reactor systems, as well as the production of gear units, propulsion components and testing systems.

The activities of the Financial Services segment comprise dealer and customer financing, leasing, banking and insurance activities, as well as fleet management.

In the expanded segment structure, purchase price allocation for companies acquired is now allocated directly to the corresponding segments. The prior-year figures were adjusted accordingly.

At Volkswagen, segment profit or loss is measured on the basis of operating profit or loss.

In the segment reporting, the share of the profits or losses of joint ventures is contained in the share of profits and losses of equity-accounted investments in the corresponding segments.

The reconciliation contains activities and other operations that do not by definition constitute segments. It also includes all of the unallocated Group financing activities. Consolidation adjustments between the segments are also contained in the reconciliation.

Investments in intangible assets, property, plant and equipment, and investment property are reported net of investments under finance leases.

As a matter of principle, business relationships between the companies within the segments of the Volkswagen Group are transacted at arm’s length prices.

Allocation of sales revenue to the regions follows the destination principle.