Investments

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong, China (Sinotruk), Bertrandt AG, Ehningen (Bertrandt), There Holding B.V., Rijswijk, the Netherlands (There Holding), and Navistar International Corporation, Lisle, Illinois/USA (Navistar), were material at the reporting date.

Sinotruk

Sinotruk is one of the largest truck manufacturers in the Chinese market. There is an agreement in place between Group companies and Sinotruk regarding a long-term strategic partnership, under which the Group participates in the local market. In addition to the partnership with Sinotruk in the volume segment, exports of MAN vehicles to China are also helping to expand access to the small, but fast-growing premium truck market. Sinotruk’s principal place of business is in Hongkong, China.

As of December 31, 2019, the quoted market price of the shares in Sinotruk amounted to €1,312 million (previous year: €908 million).

Bertrandt

Bertrandt is an engineering partner to companies in the automotive and aviation industry. Its portfolio of services ranges from developing individual components through complex modules to end-to-end solutions. Bertrandt’s principal place of business is in Ehningen.

As of December 31, 2019, the quoted market price of the shares in Bertrandt amounted to €165 million (previous year: €201 million).

There Holding

Together with the BMW Group, Daimler AG and other companies, Volkswagen holds an equity investment in There Holding B.V., Rijswijk (the Netherlands), an investment company. In turn, There Holding B.V. holds around 85 % of the shares of HERE International B.V., Eindhoven (the Netherlands). HERE International B.V. is one of the world’s largest producers of digital road maps for navigation systems. Since the interest held does not grant control in accordance with IFRS 10, HERE International B.V. is included in the financial statements of There Holding B.V. as an associate using the equity method.

Capital increases were implemented at There Holding B.V. in 2019, in which Volkswagen participated. As a result, the shares accounted for using the equity method increased by €69 million. The ownership interest in There Holding B.V. amounted to 29.7 % as of December 31, 2019.

In December 2019, it was announced that additional investors would acquire shares in HERE International B.V. Following the signing in December 2019, Mitsubishi Corporation (MC) and Nippon Telegraph and Telephone Corporation of Japan (NTT) are aiming to jointly acquire 30 % of the shares of HERE International B.V. in the first half of 2020, subject to antitrust approval. The interest held by There Holding B.V. in HERE International B.V. is expected to decline to around 60 % as a result.

Navistar

Navistar International Corporation (Navistar) is a US manufacturer of commercial vehicles; it is based in Lisle, Illinois/USA. Navistar and TRATON GROUP companies have entered into master agreements for strategic technology and supply cooperation as well as a procurement joint venture.

Since two members of TRATON SE’s Executive Board are represented on the Board of Directors of Navistar and because of the agreed cooperations, the investment in Navistar is reported as an equity-accounted investment in the consolidated financial statements.

As of December 31, 2019, the quoted market price of the shares in Navistar amounted to €429 million (December 31, 2018: €377 million).

There were unrecognized losses of €54 million (previous year: €– million) relating to investments in associates. Furthermore, there were no contingent liabilities or financial guarantees relating to associates.

INTERESTS IN JOINT VENTURES

From a Group perspective, the joint ventures FAW-Volkswagen Automotive Company Ltd., Changchun, China, SAIC-Volkswagen Automotive Company Ltd., Shanghai, China, and SAIC-Volkswagen Sales Company Ltd., Shanghai, China, were material at the reporting date due to their size.

FAW-Volkswagen Automotive Company

FAW-Volkswagen Automotive Company develops, produces and sells passenger cars. There is an agreement in place between Group companies and the joint venture partner China FAW Corporation Limited regarding a long-term strategic partnership. The principal place of business is in Changchun, China.

SAIC-Volkswagen Automotive Company

SAIC-Volkswagen Automotive Company develops and produces passenger cars. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai, China.

SAIC-Volkswagen Sales Company

SAIC-Volkswagen Sales Company sells passenger cars for SAIC-Volkswagen Automotive Company. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai, China.

There were unrecognized losses of €29 million (previous year: €– million) relating to investments in joint ventures. Contingent liabilities to joint ventures amounted to €224 million (previous year: €183 million), while financial guarantees stood at €134 million (previous year: €146 million). Cash funds of €276 million (previous year: €268 million) are deposited as collateral for asset-backed securities transactions and are therefore not available to the Volkswagen Group.

IFRS 5 – NON-CURRENT ASSETS HELD FOR SALE

On July 12, 2019, Volkswagen announced that, together with Ford Motor Company (Ford), it would be investing in Argo AI, a company that is working on the development of a system for autonomous driving. The investment will firstly include the provision of financial resources totaling USD 1.0 billion, spread over several years, and secondly Volkswagen will contribute its consolidated subsidiary Autonomous Intelligent Driving (AID). Furthermore, Volkswagen will acquire existing Argo AI shares from Ford for a purchase price of USD 500 million, payable in three equal annual installments. The transaction, including the contribution of AID, is expected to be completed in the first half of 2020 – subject to the required regulatory approvals and other conditions precedent.

On January 30, 2020, the Board of Management and Supervisory Board of Volkswagen AG resolved to sell the Volkswagen Group’s 76% interest in RENK AG. RENK AG is a global provider of high-quality gear units and propulsion systems for various areas of application. It is part of the Power Engineering segment. The sale is expected to be completed in the second half of 2020 – subject to approval by the regulatory authorities.

In accordance with IFRS 5, the RENK AG subgroup and AID are reported as disposal groups held for sale and measured at their carrying amounts.

The assets and liabilities of the disposal groups are each reported in separate balance sheet accounts. The main categories of the assets and liabilities of the disposal groups are presented below:

Accumulated income and expenses in connection with the disposal groups classified as held for sale and recognized in other comprehensive income amount to €4.6 million.