Financial Position

Financial position of the Group

In the reporting year, the Volkswagen Group’s gross cash flow went up to €49.3 (43.7) billion for earnings-related reasons. The change in working capital amounted to €−20.8 (−5.1) billion. A smaller rise in lease assets and a higher rise in liabilities were unable to offset an increase in inventories and receivables and a reduction in other provisions compared to the prior year. Cash outflows resulting from the diesel issue were higher than in 2021. The payment of the fine arising from the EU antitrust proceedings against Scania led to a cash outflow of €0.9 billion in fiscal year 2022. As a result, cash flows from operating activities went down by €10.1 billion to €28.5 billion.

The Volkswagen Group’s investing activities attributable to operating activities grew by €1.3 billion to €25.5 billon in fiscal year 2022. This also includes the full portion of the purchase price payable by Volkswagen for the acquisition of Europcar, amounting to €1.7 billion, which was contributed to Green Mobility Holding.

Financing activities resulted in a cash inflow of €4.2 billion, compared with an outflow of €7.8 billion in the previous year. Financing activities related primarily to the issuance and redemption of bonds and other financial liabilities, the redemption of the hybrid notes called in February and November 2022, the issuance of the hybrid notes successfully placed in March 2022, the payment of the €3.8 billion dividend to the shareholders of Volkswagen AG from the appropriation of net profit for fiscal year 2021, and the cash inflow of €16.1 billion from the IPO of Porsche AG (partial cash inflow from the sale of the ordinary and preferred shares). At the end of the fiscal year, the Volkswagen Group reported cash and cash equivalents of €29.7 (39.1) billion in its cash flow statement.

At the end of December 2022, the Volkswagen Group’s net liquidity stood at €−125.8 billion, compared with €−136.6 billion on December 31, 2021.

AUTOMOTIVE DIVISION NET CASH FLOW 2022

€ billion

Financial position of the Automotive Division

In the period from January to December 2022, the Automotive Division’s gross cash flow of €33.2 billion exceeded the prior-year figure by €4.1 billion. The increase was mainly attributable to improved earnings. The change in working capital amounted to €−3.3 (3.4) billion, resulting mainly from higher inventories and lower other provisions, offset by a larger increase in liabilities compared to the prior year.

Cash outflows resulting from the diesel issue were higher than in the prior-year period. The payment of the fine arising from the EU antitrust proceedings against Scania led to a cash outflow in fiscal year 2022. Consequently, cash flows from operating activities decreased by €2.5 billion to €29.9 billion.

Investing activities attributable to operating activities increased by €1.3 billion to €25.1 billion. Within this figure, investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) increased by €2.2 billion to €12.7 billion. The ratio of capex to sales revenue was 5.5 (5.1)%. A considerable portion of capex was above all allocated to our production facilities and to models that we launched in 2022 or are planning to launch in 2023, or for which production is set to start. This expenditure relates mainly to vehicles in the ID. family (ID. Buzz, ID.3, ID.7) and product upgrades for the T-Roc, Amarok and Tiguan. Other vehicles in the volume segment are the ŠKODA Enyaq Coupé and upgrades to the Scala, Kamiq and Superb Combi models. The Bentley Bentayga, the facelift of the Audi Q8 e-tron and the Q6 e-tron expand the range of models in the Premium segment, among others. In the sports segment, the Cayman, Panamera, Cayenne, 911 and Taycan are among the models being updated, and the Macan is being electrified. Other investment priorities include the electrification and digitalization of our products and enhancements to the modular and all-electric toolkits and platforms. Additions to capitalized development costs rose to €9.7 (7.8) billion in the reporting period. The “Acquisition and disposal of equity investments” (M&A) item amounted to €−3.0 (−5.9) billion. It included strategic investments in a variety of companies, especially Europcar. The sale of Sitech Sp. z o.o. in the fiscal year under review had an offsetting effect. The prior-year period had included, among other items, the acquisition of Navistar and the investment in the associate Gotion High-Tech.

In the period from January to December 2022, the Automotive Division’s net cash flow of €4.8 billion was €3.8 billion down on the prior-year figure.

In fiscal year 2022, the Automotive Division’s financing activities led to a cash inflow of €8.6 billion, compared with a cash outflow of €7.4 billion in the previous year. Hybrid notes with a total nominal amount of €2.25 billion, which were successfully issued via Volkswagen International Finance N.V. in March 2022, led to a cash inflow. They comprise a €1.0 billion note with a coupon of 3.748%, which is noncallable for five years and nine months, and a €1.25 billion note with a coupon of 4.375%, which is noncallable for nine years. Both notes are perpetual and increase net liquidity and equity by the nominal amount less transaction and other costs. The repayment of the hybrid notes called in February and November 2022 resulted in a cash outflow totaling €2.6 billion in the reporting year. The dividend payment to shareholders of Volkswagen AG was made in May 2022 from the appropriation of net profits for fiscal year 2021. It was set against cash inflows from the dividends paid by the financial services companies. The “capital transactions with noncontrolling interests” item includes the cash inflow from the sale of the shares of Porsche AG related to that company’s IPO. In the prior-year period, this item had included the present value of the cash settlement for MAN noncontrolling interest shareholders in connection with the merger of MAN SE and TRATON SE. In addition, the prior-year figure had included the repayment of a hybrid note. Financing activities also include the issuance and redemption of bonds and changes in other financial liabilities.

At the end of 2022, the Automotive Division’s net liquidity stood at €43.0 billion, compared with €26.7 billion at the end of 2021. The Automotive Division’s net liquidity as a proportion of consolidated sales revenue increased to 15.4 (10.7)% in the reporting year, mainly because of cash inflows from the IPO.

Financial position in the Financial Services Division

In fiscal year 2022, the Financial Services Division generated gross cash flow of €16.1 (14.6) billion. The change in working capital amounted to €−17.5 (−8.4) billion, leading to higher funds tied up in working capital than in the previous year because of an increase in receivables and inventories, which could not be offset by a smaller rise in lease assets. As a result, cash flows from operating activities went down by €7.6 billion to €−1.4 billion.

Investing activities attributable to operating activities were on a level with the previous year, at €0.4 (0.4) billion. The Financial Services Division’s financing activities resulted in a cash outflow of €−4.4 (−0.4) billion in the period from January to December 2022. This figure relates primarily to the issuance and redemption of bonds and to other financial liabilities, as well as dividend payments by the financing companies.

On December 31, 2022, the Financial Services Division’s negative net liquidity, which is common in the industry, was €−168.8 billion as against €−163.3 billion at the end of 2021.