Press release

August 28, 2005

Quality does not suffer

Tough cost-cutting program to bring VW profits

Würzburg, August 29, 2005

The Volkswagen Group wants to get its loss-making core brand VW back on track. With the help of the "ForMotion plus" savings and efficiency program, around ten billion euros are to be saved over the next three years, thus improving the gross profit by seven billion euros by the end of 2008. This is reported by the industry magazine "kfz-betrieb" in its issue 35/2005, which will be published on September 1st. The new VW brand boss Wolfgang Bernhard wants to make savings above all in sales and marketing, in business with suppliers and in production and warranty costs: "We are turning over every stone in the Group and examining all possibilities."

However, the quality of the vehicles should not suffer from the strict cost-cutting measures. On the contrary: VW's motto is "lower costs with higher quality". VW wants to achieve these two goals primarily through two measures. Firstly, the "internal problem-solving processes" are to be shortened immediately from the current 48 to 18 weeks. Secondly, according to VW brand boss Bernhard, managers' bonuses will in future be closely linked to product quality. In future, VW will define clear quarterly targets for development and production.

Automotive expert Prof. Willi Diez, Head of the Institute of Automotive Economics at Geislingen University of Applied Sciences, commented positively on the VW savings program: "If Volkswagen has learned one thing from the Opel crisis, it is this: Never save money at the expense of quality."

"kfz-betrieb" is a trade magazine published by Vogel Auto Medien, Würzburg. The most widely read trade magazine in the automotive industry celebrates its 95th anniversary in 2005 and is the official organ of the German Motor Trade (ZDK), the professional lobby for over 40,000 car dealerships and garages.

If you have any questions, please contact

Gerd Steiler

Management/Economics Department

"kfz-betrieb" weekly journal & online

Vogel Auto Medien GmbH & Co. KG

97064 Würzburg

Phone +49 931 418-26 56

Fax +49 931 418-20 60

E-Mail:
gerd_steiler@vogel-automedien.de

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Corporate Communications
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