Investments

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong, China (Sinotruk), Bertrandt AG, Ehningen, Germany (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, 2020, the quoted market price of the shares in Sinotruk amounted to €1,436 million (previous year: €1,312 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, Germany.

As of December 31, 2020, the quoted market price of the shares in Bertrandt amounted to €116 million (previous year: €165 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. held around 60% of the shares of HERE International B.V., Eindhoven (the Netherlands), as of the end of fiscal year 2020. 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 January 2020, in which Volkswagen participated. As a result, the shares in There Holding B.V., which are accounted for using the equity method, increased by €19 million.

As early as in December 2019, it was announced that additional investors would acquire shares in HERE International B.V. Following the signing in December 2019 and after all antitrust approvals had been obtained, Mitsubishi Corporation (MC), Tokyo (Japan), and Nippon Telegraph and Telephone Corporation of Japan (NTT), Tokyo (Japan), jointly acquired 30% of the shares of HERE International B.V. as of May 29, 2020. As a result, the interest held by There Holding B.V. in HERE International B.V. declined from around 85% to around 60%. In June 2020 and September 2020, capital reductions were implemented at the level of There Holding B.V. in connection with the sale of shares. In this process, an amount of €197 million was attributable to the interest held by Volkswagen.

Volkswagen’s ownership interest in There Holding B.V. continues to amount to 29.7%.

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, on the basis of contractual arrangements with Navistar, TRATON SE is entitled to two out of ten seats on the Board of Directors and in view of existing cooperation agreements, the investment in Navistar is reported under equity-accounted investments in the consolidated financial statements.

On November 7, 2020, TRATON SE and Navistar announced that they had entered into a binding merger agreement under which TRATON SE would acquire all outstanding ordinary shares of Navistar not already owned by TRATON SE at a cash price of USD 44.50 per ordinary share. At the time of the agreement, TRATON SE held 16.7% of Navistar’s outstanding shares. Expected to be completed in mid-2021, the transaction is subject to approval by Navistar shareholders, customary closing conditions and regulatory approvals.

As of December 31, 2020, the quoted market price of the shares in Navistar amounted to €596 million (previous year: €429 million).

There were unrecognized losses of €7 million (previous year: €54 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 €26 million (previous year: €29 million) relating to investments in joint ventures. Contingent liabilities to joint ventures amounted to €248 million (previous year: €224 million), while financial guarantees stood at €70 million (previous year: €134 million). Cash funds of joint ventures amounting to €197 million (previous year: €276 million) are deposited as collateral for asset-backed securities transactions and are therefore not freely available.

IFRS 5 – NON-CURRENT ASSETS HELD FOR SALE

As of December 31, 2019, the RENK AG subgroup and the consolidated subsidiary Autonomous Intelligent Driving (AID) were classified as disposal groups held for sale in accordance with IFRS 5 and measured at their carrying amounts. Assets of €795 million and liabilities of €370 million attributable to the disposal groups were reported in a separate balance sheet item as of December 31, 2019.

The sale of RENK was completed on October 6, 2020 following the required regulatory approvals. The sale price was €0.5 billion.

The contribution of AID was effected as of June 1, 2020. After proportional profit elimination, the contribution of AID to Argo AI at fair value resulted in a non-cash gain of €0.8 billion, which was recognized in the other operating result.