Significant Risks

The emissions issue gives rise to additional risks for the Volkswagen Group and also has an impact on existing risks. These are described under the respective risk category.

We use competitive and environmental analyses and market studies to identify not only risks but also opportunities that may have a positive impact on the design of our products, the efficiency with which they are produced, their success in the marketplace and our cost structure. Where they can be assessed, risks and opportunities that we expect to occur are already reflected in our medium-term planning and our forecast. The following therefore reports on internal and external developments as risks and opportunities that may result in a negative or positive deviation from our forecast.

Risks from the emissions issue

In 2015, the Volkswagen Group made suitable provisions for risks arising from the emissions issue, in particular for the upcoming service campaigns, recalls and customer-related measures, as well as legal risks, but also for residual value risks.

Further significant financial liabilities may emerge from existing estimation risks, especially from legal risks, criminal and administrative proceedings, higher expenses for technical solutions, lower market prices, repurchase obligations and customer-related measures.

Demand may fall – possibly exacerbated by a loss of reputation or insufficient communication. Other potential consequences include lower margins in the new and used car businesses and a temporary increase in funds tied up in working capital.

The funding needed to cover the risks may result in forced sales of assets that may consequently fail to generate equivalent proceeds.

Our ability to use future refinancing instruments may be restricted, and our ability to use existing instruments may be precluded due to current uncertainties regarding the effects of the emissions issue on the Volkswagen Group. A downgrade of the Company’s rating could also adversely affect the conditions of the Volkswagen Group’s borrowings.

We are cooperating with all the responsible authorities to clarify these matters fully and transparently.

For more information on economic, political, financial and operational risks, see the Risks and Opportunities section of the Management Report in our 2015 Annual Report and the Interim Report 2016.