Net Assets

Consolidated balance sheet structure

At the end of the reporting period, the Volkswagen Group’s total assets amounted to €422.2 billion, 3.0% more than as of December 31, 2016. The increase, which was partially offset by exchange rate effects, was primarily due to a rise in business volumes in the Financial Services Division. The structure of the consolidated balance sheet as of the reporting date is shown in the chart on this page. The Volkswagen Group’s equity increased to €109.1 billion, €16.2 billion more than at the end of the previous reporting period. The equity ratio rose to 25.8 (22.7)%.

The “assets held for sale” item contains primarily the anticipated carrying amount of some of the shares in There Holding, which are expected to be disposed of (€0.1 billion). The negotiations are still ongoing, and the disposals are expected to be finalized in the first half of 2018.

As of the end of fiscal year 2017, the Group had off-balance-sheet commitments in the form of contingent liabilities in the amount of €8.4 (6.8) billion, financial guarantees in the amount of €0.3 (0.2) billion and other financial obligations in the amount of €24.5 (25.9) billion. Contingent liabilities relate primarily to legal risks in connection with the diesel issue as well as potential liabilities from tax risks in the Commercial Vehicles Business Area in Brazil. The other financial obligations primarily result from purchase commitments for property, plant and equipment, obligations under long-term leasing and rental contracts and irrevocable credit commitments to customers. In addition, they include investments to which the Group has committed itself, in the infrastructure for zero-emission vehicles and in initiatives to promote access to and awareness of this technology. These commitments were made as part of the settlement agreements in the USA in connection with the diesel issue. Other financial obligations include an amount of €1.3 billion for this purpose.

CONSOLIDATED BALANCE SHEET STRUCTURE 2017
in percent

Automotive Division balance sheet structure

At the end of the reporting period, the Automotive Division’s intangible assets and property, plant and equipment both increased slightly year-on-year. Lease assets were down compared with the end of December 2016 as a result of the sale of part of the PGA Group. Equity-accounted investments declined slightly. The positive business results of the Chinese joint ventures, the purchase of the shares in Navistar and the remeasurement of the interest in HERE were offset by dividend payments resolved by the Chinese joint ventures, the remeasurement of investments, as well as the reclassification of some of the shares in There Holding, which are now held for sale. At €140.9 (139.0) billion, total noncurrent assets were on a level with the previous year.

Current assets amounted to €80.2 (81.1) billion and were virtually unchanged year-on-year; the inventories included in this figure increased by 3.3% for production-related reasons. Total securities stood at €13.5 (14.7) billion and total cash and cash equivalents at €13.8 (14.5) billion, both showing a decline compared with December 31, 2016.

At the end of 2017, the Automotive Division’s equity rose by 18.0% year-on-year to €81.6 billion. It was positively impacted by healthy earnings growth despite special items, as well as by effects from the measurement of derivatives recognized outside profit or loss, the hybrid notes issued in June 2017 and lower actuarial losses from the measurement of pension provisions. Currency translation effects and the dividend paid to the shareholders of Volkswagen AG led to a decline in the Automotive Division’s equity. The capital increase implemented in the Financial Services Division also reduced equity in the Automotive Division, where the deduction was recognized. The noncontrolling interests are mainly attributable to RENK AG and AUDI AG. As these were lower overall than the noncontrolling interests attributable to the Financial Services Division, the figure for the Automotive Division, where the deduction was recognized, was negative. The equity ratio increased to 36.9 (31.4)%.

Noncurrent liabilities of €69.8 (70.0) billion were on a level with December 31, 2016. Noncurrent other liabilities were down, primarily as a result of the positive effects from the measurement of derivatives. The tax reform in the USA passed at the end of the year led to a decline in deferred tax liabilities of €1.0 billion.

As of December 31, 2017, current liabilities amounted to €69.7 billion, a decline of 13.9% compared with the end of 2016. Among other things, reclassifications from noncurrent to current liabilities due to shorter remaining maturities led to an increase in current financial liabilities to €−0.5 (−1.0) billion. The figures for the Automotive Division also contain the elimination of intragroup transactions between the Automotive and Financial Services divisions. As the current financial liabilities for the primary Automotive Division were lower than the loans granted to the Financial Services Division, a negative amount was disclosed. The item “Put options and compensation rights granted to noncontrolling interest shareholders” primarily comprises the liability for the obligation to acquire the shares held by the remaining free float shareholders of MAN. Current other liabilities were down as a result of the positive effects from the measurement of derivatives. Current other provisions declined significantly due to their use in connection with the diesel issue.

At the end of 2017, the Automotive Division’s total assets amounted to €221.1 (220.1) billion and were thus on a level with the previous year.

As of December 31, 2017, noncurrent assets in the Passenger Cars Business Area increased by €1.4 billion to €111.3 billion. While intangible assets and property, plant and equipment were higher, equity-accounted investments declined. Lease assets decreased, primarily due to the partial sale of the PGA Group. Current assets were at the prior-year level, amounting to €60.1 (61.6) billion; the inventories included in this figure increased for production-related reasons. Total securities and cash and cash equivalents were down in the reporting period. On December 31, 2017, total assets were virtually unchanged compared with the previous year, at €171.3 (171.5) billion.

At €66.4 billion, the Passenger Cars Business Area’s equity was 21.3% higher than the prior-year figure, mainly due to earnings-related factors and the hybrid note issued in the reporting period.

Noncurrent liabilities decreased by 2.8%. The financial liabilities and other liabilities included in this item were down significantly. Deferred tax liabilities include the positive effect of the tax reform in the USA.

Current liabilities were down 17.1% year-on-year. Current other provisions declined significantly due to their use in connection with the diesel issue.

In the Commercial Vehicles Business Area, intangible assets were lower and property, plant and equipment higher at the end of December 2017 than at the end of the previous reporting period. Equity-accounted investments increased because of the acquisition of the shares in Navistar. Overall, noncurrent assets grew by €0.8 billion to €27.0 billion. Higher inventories and receivables led to a 4.4% rise in current assets to €16.9 billion. At €43.9 billion, total assets exceeded the prior-year figure by 3.6%.

The 9.0% rise in equity to €12.2 billion in the reporting period was mainly attributable to improved earnings. Noncurrent liabilities increased by 11.5%; the noncurrent financial liabilities contained in this item were up significantly. Driven mainly by a marked decrease in current financial liabilities, current liabilities declined by 5.0%.

At the end of the reporting period, noncurrent assets in the Power Engineering Business Area were lower than the year-end 2016 figure, driven primarily by a decrease in intangible assets. Current assets were on a level with the previous year. On December 31, 2017, the Power Engineering Business Area reported total assets of €5.9 billion, down 4.6% on the previous year.

At the end of fiscal year 2017, equity amounted to €3.0 billion, an earnings-related decline of 6.1% compared with the end of the previous year. Both noncurrent and current liabilities were slightly down year-on-year at the end of the reporting period.

Financial Services Division balance sheet structure

On December 31, 2017, total assets in the Financial Services Division of €201.1 billion exceeded the prior-year figure by 6.0%.

Noncurrent assets increased by a total of 5.4% compared with the end of 2016. Within this item, lease assets and noncurrent financial services receivables rose in line with the growth in business.

Higher volumes led to a 7.1% rise in current assets. Current financial services receivables were up €3.5 billion, at €53.8 billion. As of the balance sheet date, the Financial Services Division accounted for around 47.6 (46.3)% of the Volkswagen Group’s assets.

Equity in the Financial Services Division amounted to €27.5 billion at the end of 2017, 15.5% more than on the previous year’s balance sheet date. Equity was pushed up by earnings growth and by the capital increase implemented by Volkswagen AG at the beginning of the year to finance the growth in business and to meet regulatory capital requirements. The equity ratio rose to 13.7 (12.5)%.

Higher noncurrent financial liabilities to fund business growth led to an overall increase of 19.6% in noncurrent liabilities compared with December 31, 2016.

Current liabilities declined by 6.1%; the current financial liabilities contained in this item fell significantly. At €31.4  (33.3) billion, deposits from direct banking business were lower than at the end of the previous year.