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The Annual Audi Report and Press Conference


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |





Annual Press Conference:



• Profit before tax, revenue, production and vehicle sales reach record levels

• Further sales increases are the goal for 2006

• Succession of new models and growth help to keep jobs secure




Audi posted record figures again in the 2005 financial year for revenue, profit before tax, production and vehicle sales. “This year we will be increasing the frequency with which new models are launched: we will be presenting an average of one new model or new variant each month,” said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of AUDI AG, at the Annual Press Conference in Ingolstadt today, with reference to the past and current financial years.



“We have made an outstanding start to 2006, with all major markets reporting a significant increase in sales. We are particularly pleased about the number of customer orders we have already received for the Audi Q7 – more than 13,000 – which is due to be launched in Central Europe on March 10,” said Winterkorn.



Rise in revenue and profit before tax



The revenue generated by the Audi Group was up by 8.5 percent in 2005 to EUR 26.6 billion. Profit before tax was up by as much as 14.6 percent to EUR 1,310 million, the highest figure in company history. “This verifies our strategy of systematically increasing performance and optimising costs,” stressed Rupert Stadler, Board Member for Finance. The company’s high profitability is the result of efforts to further increase productivity in all areas. Profit after tax amounted to EUR 824 million.







Efficient investment management



The Audi Group intends to maintain the high level of capital investments of recent years in the future. Within the scope of the company’s mid-term investment plans from 2005 to 2010, funds totalling EUR 10.8 billion have been earmarked within the Audi Group. “Around three quarters of these funds will be channelled into new products. But we will also invest in product-related areas such as research and development as well as in other sales activities,” says Stadler. Total capital investments in 2005 amounted to EUR 1.7 billion. This figure is set to rise to just under EUR 2 billion a year by 2007. “By means of efficient investment management, we made optimisations wherever possible, without neglecting the necessary investments in our products. After all, over the next three years we want to launch at least six new models on the market which are all new additions to the company’s product portfolio,” said Stadler.



Record vehicle sales for the tenth time in succession



The Audi brand set a new record for vehicle sales in 2005 for the tenth year in succession: 829,109 vehicles were delivered to customers worldwide, an increase of 6.4 percent (2004: 779,441*). Best-ever figures were recorded in 39 sales markets worldwide.



The largest individual export market is the USA with 83,066 units (77,917, up 6.6 percent), followed by Great Britain with 81,374 (77,882, up 4.5 percent) and China with 58,878 (53,702, up 9.6 percent)**.



The highest growth rate among the major European markets was achieved by Spain, which recorded an increase of 13.0 percent to 49,453 units (43,764). Next in the list of the markets boasting the highest growth rate was France with an increase of 10.1 percent to 41,498 (37,676) and Italy with an increase of 10.0 percent to 55,574 units (50,500). Audi sold 247,125 vehicles in Germany, 12,033 (5.1 percent) more than in 2004.



The above-average growth of Audi in Western Europe led to the Ingolstadt brand achieving a record market share of 4.2 percent in 2005.



The positive development in Eastern Europe continued in 2005 with growth of 19.9 percent. Audi recorded an outstanding result in Russia in particular, with growth of 49.1 percent to 6,115 units (4,100).



Of the overseas markets, above-average figures were recorded by Japan with an increase of 11.9 percent to 15,388 vehicles sold (13,751), Australia (up 29.9 percent to 4,808), South Korea (up 190 percent to 2,200), South Africa (up 17 percent to 11,802) and the Gulf States (up 23.1 percent to 3,008). The company recently set up its own importer companies in Australia, South Korea and for the Gulf States.



Lamborghini vehicle sales were approximately on a par with the previous year at 1,600 sports cars (1,592).



Vehicle and engine production at a record level



Car production (including Lamborghini) rose by 3.4 percent in 2005 to a record level of 811,522 units. In the year that celebrated 25 years of quattro, the proportion of Audi vehicles fitted with permanent four-wheel drive reached 27.1 percent. Engine production was up by 14.1 percent to 1,695,045 units.



Succession of new models and growth help to keep jobs secure



The number of employees as at December 31, 2005 remained at the previous year’s high level – 52,430 (53,089) employees – despite the sale of the subsidiary COSWORTH TECHNOLOGY LIMITED (723) with effect from January 1, 2005. 44,970 (44,972) people were employed at AUDI AG, including 31,337 (31,202) in Ingolstadt und 13,633 (13,770) in Neckarsulm. AUDI HUNGARIA MOTOR Kft. employed a workforce of 5,022 (5,074) employees, the Lamborghini Group had 681 (721) and AUTOGERMA S.p.A. 845 (774) employees. With 2,236 (2,181) apprentices in 20 professions, the number of apprentices at the Ingolstadt and Neckarsulm plants reached the highest level ever in company history.



Outlook for 2006: further growth



“No brand will grow like Audi in the near future,” stressed Winterkorn. “We are planning to sell significantly more vehicles in 2006 than in the record year 2005. We have our sights set firmly on the mid-term sales target of one million vehicles.” Audi’s growth strategy rests on three pillars. Firstly, to expand the model range to include not only sporty derivatives of the core model lines, but all above new products in previously unoccupied segments and niches. Secondly, to exhaust the potential of existing markets more effectively by systematically improving both product range and quality, and by further optimising the dealer organisation and range of services. And thirdly, to systematically open up new growth markets, above all in the regions of Asia and Central Europe and in the Middle East.



For the coming year, Winterkorn also announced a further increase in productivity and a reduction in production time. “This is the only way we will able to survive in the face of international competition,” he stressed. “But thanks to significant growth, the number of jobs will remain at today’s high level,” reassured Winterkorn.



* ) Prior-year figures and growth rates in brackets

**) The statistics for China were converted to sales to customers from January 1, 2005 (in accordance with other markets).


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Statements Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of AUDI AG



- In 2005 we posted record figures for vehicle sales, production, revenue and profit.

- With our renewed and expanded product range, we are laying the foundations for even greater successes in existing and new markets.

- We are systematically continuing our model drive and expect 2006 to be another record year for Audi.

- Audi is the undisputed number one among companies offering premium cars in China. We will continue to increase sales with the help of what now amounts to 120 exclusive Audi Centres in China.

- Audi of America will reach the breakeven point by the end of this year.

- The many awards that we received for our cars in 2005 are gratifying confirmation of the international success of the Audi brand.

- The fact that Audi is so well positioned is the result of a product and brand strategy geared to the long term.

- Part of our strategy is to produce higher volumes and expand considerably with the help of additional new models and model versions.

- We are aiming to break through the magic sales barrier of one million vehicles as early as the end of 2008. By the year 2015 we plan to be selling at least 1.4 million vehicles.

- Through our growth strategy, we want to maintain the size of our workforce at the current level.

- There has already been an overwhelming response to the Audi Q7.

- The new R10 racing car is fitted with a high-performance TDI engine. We hope that this revolutionary vehicle concept will take us to victory at Le Mans.








Part 1: Review of 2005



Ladies and Gentlemen,



It is my pleasure to welcome you to the Audi Annual Press Conference.



I wish to start my presentation today by saying something about the most important figures and events of 2005. I will then hand over to our Board Member for Finance, Mr Rupert Stadler, who will explain the key company figures to you. In the second part of my speech, I will then focus on the current situation at Audi and take a look forward to the future.



2005 was a very good year for Audi.

The total revenue generated by the Audi Group in 2005 rose by 8.5 percent to the highest level to date, around EUR 26.6 billion.



Our profit before tax also improved further on the previous year, and amounted to EUR 1.3 billion.



We sold more than 829,000 vehicles in 2005 – more than ever before. This is equivalent to a increase of 6.4 percent compared with the year before.



Audi sales have continued to rise steadily over the last ten years – even in difficult economic periods. 2005 was the tenth record year in succession.



We achieved record sales figures in 39 markets in 2005, making further significant gains in the major European markets in particular.

Europe remains the most important pillar of our success. Despite extremely varied underlying economic conditions and market situations, we increased sales in this region by 7.4 percent.



The Western European market excluding Germany recorded an increase of 8.4 percent to over 351,400 vehicles. The above-average growth of Audi in Western Europe led to the Ingolstadt brand achieving a record market share of 3.2 percent in 2005.



The positive development in Eastern Europe continued in 2005 with a sales increase of 19.9 percent to almost 21,000 vehicles.



Audi is the undisputed number one among companies offering premium cars in China.

We sold almost 59,000 vehicles there in 2005 (including Hong Kong). The A4 is selling particularly well, and the long-wheelbase version of the A6 specially developed for the Chinese market is also proving to be a fast-seller.



The largest individual export market is the USA with more than 83,000 units. This represents a year-on-year sales increase of 6.6 percent.



Audi sold over 247,000 vehicles in Germany, 5.1 percent more than in 2004.



Let us now take a short trip to Italy – to Lamborghini.

The existing sales record of 1,592 vehicles was surpassed once again last year. 1,600 of our super sports cars were delivered to customers in 2005, the majority of these in Germany, the USA and Western Europe.



Let us move on now to other key figures for the Audi Group: the vehicle production volume at Audi and Lamborghini expanded by 3.4 percent to just under 812,000 units. So as well as achieving the best-ever sales figures for the tenth year in succession, we also achieved a new production record.



Engine production at our Hungarian plant in Györ rose by 14.1 percent to 1.7 million units. In summer 2005, we built the 10 millionth engine in Györ.



The number of employees in the Audi Group at the end of December was approximately on a par with the previous year, at around 52,400. Audi provides around 45,000 secure jobs in Germany alone.

Our company agreement entitled “Audi’s Future” concluded in April 2005 rules out redundancies for operational reasons up to the year 2011.



Ladies and Gentlemen,

A key factor behind Audi’s success is the design of its vehicles.



2005 saw all Audi models finally get their “new face” – the single-frame radiator grille. This even sportier look has been received positively without exception by customers and experts alike.



As well as design, sportiness, quality and reliability are what make our vehicles so fascinating. And it goes without saying that this fascination is exuded by new models in particular.



The Audi Q7 celebrated its world premiere at the IAA Motor Show in Frankfurt. We also presented our new A4 Cabriolet for the first time at the IAA. And your reports, Ladies and Gentlemen, were especially complimentary with regard to the classic elegance of its soft top.



At the Tokyo Motor Show in October, Asia’s most important car exhibition, we presented our luxury-class sports car – the S8 – for the first time.



The Shooting Brake study was another highlight in Tokyo. This combination of sports coupé and Avant offers a number of innovations including the adaptive damping system known as magnetic ride, LED headlight technology and a touch screen monitor with character recognition in conjunction with the navigation system plus.



The many awards that we received for our cars in 2005 are gratifying confirmation of the international success of the Audi brand. I’m afraid it would take far too long now to list all the prizes that we received. I just wish to say the following: although it hasn’t been launched yet, the new Audi Q7 has already received two important prizes: the “Golden Steering Wheel” from the newspaper “Bild am Sonntag” and the “Auto Trophy” from the readers of “Autozeitung”.



We were particularly pleased about the outstanding brand image that was confirmed by the readers of “Autozeitung”. Audi was the clear winner here – just as it was in 2004.



Allow me to say something briefly about motor racing in 2005: the Le Mans 24 Hours was very exciting and successful. Together with JJ Lehto and Marco Werner, Tom Kristensen clinched Audi’s fifth Le Mans win in the Audi R8.

We believe this once again confirms our decision to participate in motorsport. I will be saying more about this in the second half of my speech.



That’s all from me for the moment. Thank you for your attention. I’ll now hand over to the Board Member for Finance and Organisation, Mr Rupert Stadler.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Statements Rupert Stadler, Member of the Board of Management of AUDI AG Finance and Organisation



- We increased revenue to a new record level of EUR 26.6 billion.

- In Germany and in Europe, our vehicle sales significantly outstripped market growth. The strength of our brand in our European heartland was consequently consolidated.

- We also expect to enjoy continuing growth in the USA and the Asia/Pacific region, not least due to the optimisation of our sales structures.

- Our operating result increased by an impressive 14.5 percent to EUR 1.4 billion.

- The qualitative growth from the improved model and equipment mix and the effects of our process and cost improvement measures are consequently also reflected in the development in earnings.

- We also recorded an extremely impressive rise in profit before tax, by 14.6 percent to over EUR 1.3 billion.

- With a return on investment of 9.7 percent, we are well on the way to achieving our long-term target of more than 10 percent in the very near future.

- Our company’s financial strength is also reflected in the cash flow statement. We doubled net cash flow, i.e. cash flow from operating activities less cash flow from investing activities, to EUR 1.5 billion compared with the previous year.

- Our net liquidity of EUR 3.4 billion – a rise of almost 67 percent – provides an excellent basis for realising our growth objectives.








Ladies and Gentlemen,



The trend in worldwide demand for cars remained positive last year, despite rising fuel prices. However, growth was driven almost exclusively by the dynamic progress of South American and Asian car markets, whereas the major traditional sales markets merely stagnated. In the USA, for instance, registrations of new cars and light commercial vehicles failed to improve on the previous year, in spite of massive discounting campaigns above all by US manufacturers.



As Dr. Winterkorn has already mentioned, by setting a new sales record for the tenth year in succession Audi was nevertheless able to maintain the steady growth of recent years. This was thanks in no small measure to our ambitious efforts to expand Audi’s attractive range of models even further. It furthermore reflects the fact that we are exploiting the potential of existing and new markets more systematically, and working to enhance the image of the Audi brand still further.



The success of our efforts over the past year is also reflected by a notable improvement in our key financial performance indicators. We have thus yet again achieved our objective of “qualitative growth”.



Both unit sales and revenue have risen to new record levels, and the Audi Group’s profit before tax likewise showed an improvement on the previous year. Last year’s success is moreover reflected very clearly in a renewed improvement in cash flow and net liquidity.



I will be explaining these important performance indicators to you in greater detail. I would first of all like to start with the changes to key items in the Income Statement for the past year.



As already mentioned, we boosted revenue by 8.5 percent to a new record high of EUR 26.6 billion.



In our home market Germany, the rise in sales of vehicles displaying the four-ring badge outstripped market growth. Revenue consequently increased by 7.1 percent to around EUR 8.4 billion.



With a rise in revenue of 10.8 percent to EUR 13.5 billion, growth in Europe excluding Germany was even more marked, flying in the face of the market trend. The strength of our brand in our European heartland was consequently consolidated.



The North American car market continued to be dominated by a raging price war last year. Even though numerous high-volume manufacturers stepped up the sales incentives being offered to buyers of new cars compared with the previous year, as mentioned above, the market as a whole stagnated over the full year.



Notwithstanding this development, we succeeded in improving sales of the Audi brand to more than 83 thousand vehicles in the past financial year, in contrast to the general market trend. Despite the continuing weakness of the dollar, revenue therefore rose to almost EUR 2.4 billion.



This year, we expect to enjoy continuing growth in the USA. Alongside various measures to restructure and optimise the dealer network, we expect to receive an added boost from new models such as the Audi Q7, our premium SUV that will be launched mid-way through the year. Particularly the image of the Audi brand should benefit from the appearance of the Audi RS 4, which will be available in the USA from the second quarter of 2006.



The development in sales of our vehicles in the Asia-Pacific region last year was dominated by our changed sales structures in China. Audi assumed full responsibility for vehicle sales there from September 1, 2005.



Since that date, both imported and locally built Audi vehicles have been sold via a uniform, exclusive sales network currently comprising around 120 dealers. We have consequently established an excellent basis for future growth in the Chinese market and for defending our unchallenged market lead in the premium segment, with a position that is the envy of our competitors. Revenue for the past year in the Asia-Pacific region was up by 4.9 percent on the previous year, at just over EUR 2.0 billion.



Ladies and Gentlemen,

I would like to follow on from this overview of the regional composition of our business with an explanation of the key items in the Income Statement.



The cost of sales rose last year at a much slower rate than revenue, to around EUR 23.4 billion, among other things thanks to productivity improvements in the sphere of production and more attractive purchase prices.

Even though exchange-rate factors continued to erode proceeds, this meant that we were able to boost gross profit by over 25 percent to almost EUR 3.2 billion.



As mentioned earlier, the market situation last year was mixed, and remained dominated by high pressure of competition and aggressive price wars. Amid this unrelentingly tense situation, we were able to keep the rise in distribution costs down to 7.0 percent, to just under EUR 1.9 billion, and thus likewise below the rate of revenue growth.



Administrative expenses were even kept slightly below the prior-year level, at EUR 240 million.



The other operating result fell to EUR 372 million, primarily due to the lower result from currency hedging compared with the previous year.



The operating result consequently amounted to just over EUR 1.4 billion – up an impressive 14.5 percent. The qualitative growth from the improved model and equipment mix that I mentioned earlier is consequently also reflected in the development in earnings. At the same time, the positive effect of our ongoing process and cost improvement measures helped to bring about a steady improvement in the quality of our earnings.



This positive development in our operations is all the more satisfying in that we have succeeded in compensating for adverse currency effects amounting to around EUR 800 million over the past three years.



Despite the significant rise in interest income by virtue of our higher cash and cash equivalents, the financial result for last year dipped slightly to minus EUR 107 million. Among other things, income resulting from the accounting for the shares in FAW-Volkswagen Automotive Company, Ltd. using the equity method – Audi holds a 10 percent stake in that company – was down on the previous year. The higher expenses from the total interest on provisions also diminished the interest result further.



We consequently posted a profit before tax of more than EUR 1.3 billion last year. That represents an impressive rise of 14.6 percent on the previous year.



The profit before tax of the Audi Group incorporates the consolidated individual earnings figures of AUDI AG and its subsidiaries. I would like to comment briefly on the most significant of these here.



The profit before tax of AUDI AG was over 22 percent up on the previous year at EUR 939 million. In addition to volume growth for vehicle sales, this was attributable in particular to the improved model and equipment mix mentioned in my analysis of the consolidated net profit.



The profit before tax of AUDI HUNGARIA MOTOR Kft. rose again in the past financial year. The increase of almost 7 percent to EUR 320 million is all the more satisfying in view of the fact that proceeds from the engine sector more than offset the cyclical effects of sales of the TT.



The profit before tax of the Lamborghini Group, in this case excluding Autogerma, was on a par with the previous year at EUR 4 million.



AUTOGERMA S.p.A. improved its pre-tax profit by more than 6 percent to EUR 69 million. As well as the aforementioned rise in volume, the model mix also improved, with a positive impact on the quality of the result.

Last year, quattro GmbH boosted its pre-tax profit by 25 percent to EUR 35 million. With production of the RS 6 having ceased in 2004, the launch of the Audi RS 4 at the end of last year initially proved a burden on earnings from vehicle business. However, the positive development in the S line and alloy wheels product categories more than compensated for this negative effect.



Tax expense amounted to EUR 486 million, with a tax ratio of 37 percent. The rise compared with the previous year is primarily due to a one-off effect in 2004. Under IFRS accounting rules, the tax relief on capital investments by AUDI HUNGARIA MOTOR Kft. had to be reported as deferred tax income at that time.



Our profit after tax is correspondingly EUR 824 million.



After deduction of EUR 462 million by way of a profit transfer to Volkswagen AG, the net profit of the group amounted to EUR 362 million.



In all, last year was a very successful one for Audi – as highlighted particularly well by key earnings data in addition to the absolute performance indicators from the Income Statement.



The rate of return before tax, for instance, rose from 4.7 percent to 4.9 percent. The rate of return from operating activities actually rose from 5.1 percent to more than 5.3 percent.



We moreover maintained the trend of recent years in the development in return on investment. As a result of the higher operating result, our efficient investment management approach and systematic management of the working capital, we succeeded in boosting the return on investment by a further percentage point to 9.7 percent. This puts us well on the way to achieving our long-term target of a return on investment of more than 10 percent in the very near future.



Ladies and Gentlemen,

Allow me now to consider the development in major components of cash flow.



This careful management of our working capital has yielded a further improvement in the cash flow from operating activities.

At more than EUR 3.2 billion, it is almost 21 percent up on the already high prior-year level. The cash outflow for investing activities amounted to around EUR 1.7 billion last year. That represents a decrease of more than 11 percent on the previous year. Thanks to our methodical investment management approach, we were nevertheless able to implement in full all product and investment plans for the forthcoming expansion of our model range, to our accustomed standard of quality and in keeping with the timescale envisaged. As a result of the substantial rise in cash inflows for operating activities and active management of cash outflows for investing activities, the net cash flow rose to more than EUR 1.5 billion – double the previous year’s level!



The positive development in cash flow has of course also had the effect of significantly boosting our net liquidity. This latter was up by almost 67 percent at December 31, 2005, to EUR 3.4 billion, and consequently provides an excellent basis for realising our own growth objectives that have self-funding as their aim.



Capital investments fell from just under EUR 2.1 billion to around EUR 1.7 billion. Investments in property, plant and equipment accounted for a share of around 67 percent of this total, or just over EUR 1.1 billion. Development expenditure recognised as an intangible asset amounted to EUR 543 million, representing 32 percent of total capital investments.

The extent to which development expenditure was recognised as an intangible asset fell to 35 percent last year. As no substantiated market experience is yet available for the new models such as the Audi Q7 and the R8, here too we have exercised due mercantile prudence.



Ladies and Gentlemen,

Finally, let me mention the changes to important items on the Balance Sheet. I ought to point out that a number of accounting standards changed last year, as a result of which the corresponding prior-year figures have likewise been adjusted. The changes had no significant financial impact on the Audi Group as a whole.



The balance sheet total rose by 8.1 percent, to EUR 16.1 billion.



Non-current assets were 4.2 percent lower than in the previous year, at almost EUR 8.6 billion. As well as property, plant and equipment, which fell as a result of lower additions, intangible assets likewise showed a year-on-year decrease.

On the other hand, current assets rose by almost 27 percent to more than EUR 7.5 billion. The reason for this increase is, in the first instance, the substantial rise in cash and cash equivalents of more than EUR 1.3 billion, to over EUR 3.1 billion. As already mentioned, this therefore assures us ample financial resources for securing our targeted growth by extending the model range through new models and additional derivative versions, while simultaneously making long-term, sustained inroads into new markets.



Equity at December 31, 2005 was up 4.7 percent to EUR 6.1 billion. The capital injection of EUR 195 million by Volkswagen AG had a positive effect here. Equity rose by a further EUR 362 million following the allocation of the net profit for the 2005 financial year to retained earnings. These increases were, however, offset in part last year by the creation of a reserve for actuarial gains and losses for the calculation of retirement benefit obligations. Under the revised accounting standards, a sum of EUR 192 was to be reported in a special reserve within equity in the 2005 financial year. The accumulated negative effect at the end of 2005 was EUR 352 million.



As a result of the year-on-year rise in the allocation to this special reserve within equity, the equity ratio eased off by 1.2 percentage points to 37.9 percent.



Liabilities rose by 10.3 percent to over EUR 10.0 billion.



Non-current liabilities remained virtually unchanged from the previous year at EUR 4.2 billion.



On the other hand, current liabilities rose by 21.3 percent to EUR 5.8 billion. In addition to the liabilities and provisions for current operations, the liabilities from accounting for the exchange-rate-dependent market values of foreign exchange contracts rose. Liabilities to affiliated companies rose as a result of the higher profit transfer to Volkswagen AG than in the previous year, among other reasons. This was furthermore the first year in which the advances received from car hire companies in connection with buy-back transactions were accounted for.



The balance sheet structures as a whole thus likewise reflect our group’s healthy course of growth.

Allow me to take stock of our key performance indicators again briefly:



We succeeded in increasing worldwide sales of the Audi brand by 6.4 percent.



In spite of exchange rates remaining adverse, the 8.5 percent rise in revenue was disproportionately high compared with sales, taking the total to EUR 26.6 billion.



However, we are particularly delighted with our profit before tax. This indicator reached a new record level of EUR 1.3 billion.



Our financial strength is of course also reflected in the rise in net liquidity of almost 67 percent to EUR 3.4 billion.



Ladies and Gentlemen,



2005 was one of the most successful years in Audi’s history.

The disproportionate development in the key financial performance indicators compared with our unit sales bears testimony to both the quantitative and – above all – qualitative growth of our company. This fact is emphatically expressed above all by the dynamic development of revenue and profit before tax.



Something else that I personally find impressive is our new Annual Report, which you will have received this morning. As you will be aware, we at Audi embrace the principle of “Vorsprung durch Technik” – or progress through technology – in our fascinating products. Reason enough for us to seek to reflect this progress in our most important corporate publication, the Annual Report. The result is an attractive blend of facts, features, reports and interviews dealing with most diverse facets of the topic of mobility.



We fully intend to maintain our dynamic progress this year. Even if no improvements to the general market conditions are expected and we have to assume that competition in the premium segment will become even more intense, we are aiming to build on our success in 2006. Instead of joining in the price wars that have long been raging, this year we will be unveiling a glittering array of new models that will add to our momentum.



We believe that with the new Audi Q7 premium SUV, the successor models to our successful TT and allroad quattro models and the appearance of numerous new S versions to complement our sporty models – such as the S3, S6 and S8 – we will be more than adequately prepared for our next step of growth.

We will in addition be intensifying our market activities and will be extending the process improvements that have already been successfully implemented to include cost aspects, in order to realise our aim of steady, constant growth over the next few years.



Thank you for your attention.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Statements Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of AUDI AG



Part 2: Current situation and outlook



Ladies and Gentlemen,

International competition in the car industry is tough and we car manufacturers have to live according to the principle of “Push them out before you get pushed out yourself.”

The fact that Audi is so well positioned is the result of a product and brand strategy geared to the long term. Our core competence is to build sporty, high-quality cars. This applies equally to our high-volume standard segments and our exclusive niche products.



Our A3, A4, A6 and A8 model lines are supplemented by emotional derivative versions and fascinating new models. Examples include our S and RS models, Cabriolets and the new Audi Q7 SUV. Part of our strategy is to produce higher volumes and to expand considerably with the help of additional new models and model versions.



We are aiming to break through the magic sales barrier of one million vehicles as early as the end of 2008. And that will just be the start! By the year 2015 we plan to be selling at least 1.4 million vehicles a year.



One way in which we intend to achieve this goal is to exploit the potential of existing markets more effectively. We have already made progress in this respect: last year, for example, we succeeded in boosting sales in Spain, France and Italy by at least 10 percent.



In Western Europe, Audi still tops the sales charts for 12-cylinder luxury saloons.



In 2005 we sold more of these vehicles in this market than both of our key competitors put together. Incidentally, we also expect our sales of the Audi A8 to be up by over 45 percent in the first two months of this year!



We are also the market leader in Western Europe in the A4 and A6 segments.



We likewise have a sound foundation in the difficult domestic market of Germany: last year we managed to boost our market share by 0.2 percentage points, to 7.4 percent.



The economic forecasts for the German economy are cautiously optimistic. The increase in VAT planned for 2007 will possibly prompt people to buy a new car this year instead. The question remains, though, as to what the state of the economy will be like in 2007.







Whatever happens, Audi will stand firmly by Germany as a production location. 45,000 highly qualified and motivated employees make our success possible. It goes without saying that we have to reduce our costs and increase productivity in order to survive in the face of fiercer competition. However, our new, intelligent vehicle architecture, the modular longitudinal platform, is already producing clear synergy effects. And through our growth strategy, we want to maintain the size of our workforce at the current level.

No car brand will grow as strongly as Audi over the next few years!



Growth in Germany will not be influenced so much by domestic demand, but above all by export.



Audi is becoming increasingly less dependent on German domestic demand. This is because we are developing more and more into a globally active company: while we still sold almost 46 percent of our vehicles in Germany in 1995, this figure was below 30 percent in 2005.

Our sales in the USA and Asia alone have increased from 13 to over 22 percent in the last ten years.



In China, Audi has been the leader in the premium segment for some time. And we are currently in the process of extending our lead further: in January, we recorded an exceptionally high growth rate and sold almost 6,400 vehicles.



Our standing in terms of reliability and customer satisfaction also confirms our strong position: Audi came out on top yet again in the J.D. Power rankings for China.



And thanks to what now amounts to around 120 exclusive Audi Centres in China, we will continue to increase our volume in this important growth market.



There is also still considerable potential in the USA. Audi of America will reach the breakeven point by the end of this year. The new Audi Q7 will of course have an important role to play in this. However, there’s still need for action as far as our North American sales structures are concerned. We will therefore be strengthening our profile as a premium manufacturer this year and investing in the dealer network together with our sales partners. We will be focusing on 25 major cities in particular.



It is important to exhaust the potential of existing markets. But it is equally important to open up new markets. One good example is Russia, where we achieved an enormous growth rate last year of almost 50 percent, to more than 6,100 units.



We will continue to push on with our strategy of tapping new markets this year – in Eastern Europe, India, Korea, Australia and in the Golf States, for example.



But growth and high volume are not everything: we will increase the value added per vehicle in order to increase our profits. We are also on the right path here: to start with, we are reducing our unit labour costs by means of optimised production processes and flexible working hours. At the same time, we are offering our customers numerous attractive optional extras.



For Audi, the trend towards vehicle customisation is an important means of increasing the profit generated per vehicle. An ever increasing number of customers are prepared to spend more than 200,000 euros on one of our exclusively equipped vehicles.

Luxury equipment is closely related to a brand’s high prestige and outstanding image.

Audi is already a strong brand and is set to become even stronger! Our long-term goal is to become the world’s most successful premium brand.



The latest figures once again speak in favour of the fact that we are getting closer to achieving this goal. In January and February this year we will increase our sales total by around 20 percent compared with last year.



So the year has got off to a very good start for Audi. We will continue to keep up this pace and expect to achieve new record figures again in 2006.



Ladies and Gentlemen,

Perhaps you are asking yourselves what is going to happen to the SEAT brand, which is part of the Audi brand group. It’s no secret that there have been a few problems here in the past. In order to get SEAT back on the road to success, we will be strengthening the lower price segment. We will be continuing our intensive cooperation with SEAT. Technical development provides the focus of this cooperation. One idea, for example, is to position a concept like the VW Caddy within SEAT.



But let’s get back to the Audi brand.

In order to achieve our ambitious growth targets, we launched a model drive last year which is set to continue for quite some time.



Audi doesn’t just stand for beautiful, sporty, high-quality and reliable cars.



Audi also stands above all for technical innovations:

- full galvanisation,

- quattro,

- progressive engine technology such as TDI and FSI,

- lightweight design

- the MMI operating system

- and ceramic brakes

are just a few examples. Several other innovations such as driver assistance systems, LED headlights or magnetic ride suspension are now being launched. All our innovations have one thing in common: they have a specific benefit.

And that’s something our customers have come to appreciate.



Audi performed extremely well again in the readers’ poll to find “The best cars”, which was published in the German magazine “auto motor und sport” this month.

And once again it was the most successful brand – just like last year.

More than 100,000 readers took part in the German poll alone.



The A3 was victorious for the second time in a row, which clearly underlines the design and technical strength of our compact car. The A6, the Audi model that has won the most awards, was also crowned with the title of “best car” in what is the car industry’s most important readers’ poll. And the A8 topped the luxury class for the fourth time in succession. In view of the fact that our model, which is now almost four years old, was up against the new Mercedes

S-Class, this is something we are particularly proud of at Audi.



Ladies and Gentlemen,

At the two motor shows held in the USA at the beginning of this year, we already gave an impression of what models Audi is – or might be – launching.



One of the highlights at the Detroit Motor Show was the new S6 with V10 FSI engine which delivers an output of 435 horsepower. The special features of this model include the single-frame grille with chrome bars and the LED light strip for the daytime running lights in the front bumper. The market launch of this model is scheduled for the first half of 2006.



Another highlight was the Roadjet Concept study. This vehicle can also be seen here today.

With its long wheelbase of 2.85 metres, this car offers occupants a clear bonus in terms of space and comfort. This study also gave us the chance to present another electronic innovation: Audi drive select allows the driver to pre-select various vehicle characteristics – from comfortable to sporty. This not only changes the suspension and damping, but also engine characteristic, transmission and steering.



The Audi Q7 also features a number of innovations, in the field of driver assistance systems, for example: adaptive cruise control is a radar-assisted cruise control system with automatic distance control and obstacle warning. Audi side assist is specially designed for lane-changing and helps the driver by monitoring the blind spot.

And the Audi parking system advanced uses a rearview camera to make sure the driver can safely manoeuvre into any parking space.



Up until a few days ago, we presented the Audi Q7 to the international press in Phoenix/Arizona. More than 300 journalists from all over the world tested our SUV in a unique landscape. The USA is the most important market for our SUV. We are planning to sell around 30,000 units a year there.



The Audi Q7 will be in European dealers’ showrooms from March 10. But even before it takes to the road, our SUV is already attracting attention. I mentioned before that the Audi Q7 has already picked up some important prizes. The response from our customers is quite overwhelming: by yesterday evening we had received more than 13,000 fixed advance orders – in Europe alone! That’s an outstanding figure. We will be stepping up production so as to make sure that all orders are delivered as quickly as possible. As you can see, the diesel share of orders is very dominant so far. But this will change when orders start coming in from the USA and Asian markets in May.



Ladies and Gentlemen,

So what other models will help to make sure that Audi achieves new record figures this year?



The Avant and Cabriolet versions of the RS 4 saloon presented last year will celebrate their world premiere at this year’s Geneva Motor in Geneva – next week in other words. The market launch of these power packs – with their 420-horsepower high-revving engine – will be in the first half of 2006.



We will also be presenting the successor to the allroad quattro in Geneva.

The new Audi A6 allroad quattro with quattro drive as standard puts up an even more dynamic performance – both on the motorway and across open terrain.

This model will also be launched in the first half of 2006.



I’m particularly looking forward to our super sports car – the R8. It will be launched with a 420-horsepower 4.2-litre engine; other attractive engine versions offering even more power will follow at a later date. The start of production will be in Neckarsulm at the end of 2006; the market launch will follow in 2007.



I’m afraid I’m unable to show you any pictures yet of the following models that we will be launching this year:



The S3 will be a three-door model with a sporty engine. It will be in dealers’ showrooms in the second half of 2006.



The new TT Coupé will continue the success of the TT. The new TT will be powered by sporty engines, combined throughout with DSG. It will be launched in the second half of 2006.



The A5 Coupé will mark the start of a new technical generation. Like the R8, the A5 opens up a new segment for Audi in which we will be considering various model versions. And the name has already been decided on: the Coupé will definitely be launched as the A5 – and the launch will be in the first half of 2007. And, one more thing I can also reveal to you is an important decision that has been taken regarding the production location: we will be building the A5 Coupé here in Ingolstadt.



To conclude, I would like to say a word about motor racing.



We presented the new Audi R10 racing car in Paris and at the Los Angeles Auto Show.



This car is fitted with a high-performance TDI engine which is intended to underline our expertise in the field of diesel technology, especially in the USA. The R10 will compete in its first race on March 18 – at the 12 Hours of Sebring.

We also hope, of course, that this revolutionary vehicle concept will take us to victory at Le Mans.



Audi will also continue to concentrate on the DTM in the future. With Audi and Mercedes, two of the leading premium manufacturers will be competing against each other in future. This is a repeat of the duel between the legendary Silver Arrow models of Auto Union and Mercedes-Benz that captivated spectators 70 years ago. Audi will be entering an advanced version of the A4 DTM with a new V8 engine.



Ladies and Gentlemen,

Let me summarise:



- In 2005 we posted record figures for vehicle sales, production, revenue and profit.

- With our renewed and expanded product range, we are laying the foundations for even greater successes in existing and new markets.

- We are systematically continuing our model drive and expect 2006 to be another record year for Audi.



Our success wouldn’t be possible without the enthusiasm of our employees. On behalf of the Board of Management of AUDI AG, I would therefore like to thank all our employees worldwide for their hard work.



In our company agreement “Audi’s Future” we have decided to introduce an additional performance-related bonus for employees when the operating result reaches a certain level.



If we look at the past financial year, we see that the requirement for this extended profit share for employees has been fulfilled. This means that we will be giving our employees a greater share in our company’s profits than was previously the case.

We would also like to thank our customers most sincerely for their loyalty.



And I would like to thank you, Ladies and Gentlemen, for your attention.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









General Company Profile

Audi – Sporty, Progressive, Sophisticated




AUDI AG is an international developer and manufacturer of high-quality and innovative cars. In 2005, the company achieved record revenue of 26.6 billion euros and sold almost 830,000 vehicles. Audi leads the sports-oriented brand group in the VW Group comprising the Audi, SEAT and Lamborghini brands.



The current model range comprises the A3, A4, A6 and A8 model lines and the TT sports car in individually varying body, equipment and additional sports versions. Audi is extending its range in 2006 with an innovative SUV in the shape of the Audi Q7.



The company has set itself lofty goals for the future: Audi aims to sell a million cars worldwide for the first time in 2008. The brand has its sights set extremely high: Audi intends to become the leading manufacturer in the premium segment. Even today, Audi’s great potential is reflected in renowned opinion polls and important awards.



A crucial element of the company philosophy is derived from the unmistakable Audi slogan: “Vorsprung durch Technik” is the concrete claim in all areas of development. Many groundbreaking achievements have therefore also been made at Audi, the most prominent of which is “quattro” permanent four-wheel drive, which celebrated its 25th anniversary in 2005. Innovations such as lightweight aluminium design, direct-injection petrol and diesel engines (TDI/FSI) and the award-winning MMI infotainment system are also inextricably linked with Audi.



The growth of the company went hand in hand with continuous expansion of the production sites, on which a total of more than 52,000 people are now employed. As well as the continuous modernisation and expansion of its two traditional German plants in Ingolstadt and Neckarsulm, Audi also invested systematically in new locations abroad. With the internal agreement “The Future of Audi – Performance, Success, Participation”, concluded in 2005, it has been possible to safeguard employment at both German locations up to the year 2011.



Audi has been producing engines at Györ in Hungary since 1994. The production capacity of the plant, in which more than 5,000 people are now employed, is in excess of 1.6 million engines per year. The TT Coupé and Roadster models are also assembled here.







Audi was one of the first European car manufacturers to be locally represented in the attractive Chinese market. Audi has laid excellent foundations for achieving further success in this important market with the production of the A4 and a version of the A6 adapted to the needs of the Chinese market at the Changchun plant in Northern China.



The legendary Italian super-sports-car manufacturer Lamborghini, as a subsidiary of Audi, emphasises the sporty credentials of the brand group. The company, based in Sant’Agata Bolognese, has been decisively developed since the Audi takeover in 1998, without giving up any of Lamborghini’s typical uncompromising nature in terms of design and technology. The current range comprises the Murciélago in Coupé and Roadster versions and the Gallardo Coupé and Spyder.



For Audi, contact with customers is of crucial importance: they should be able to “experience the brand”. The Audi Forum was opened in Ingolstadt in 2000 with this in mind. This is home to – among other things – the Central Reception for visitors, the Customer Center for customers collecting their Audi in person, a restaurant, the visionary architecture of the “Market and Customer” building, and the “museum mobile”. The latter of these presents the 100-plus years of history of the Audi brand – from the founder August Horch right up until today – in a futuristic environment, creating the perfect link between the past and future of the company. The recipe for success used by the Audi Forum can now also be found in Neckarsulm, where the leitmotif of the innovative use of aluminium has been taken up in designing the forum, and in many major international cities such as Berlin, New York, London, Paris or Beijing.



Not to be overlooked is the fact that successful involvement in motorsport was, and is, of critical importance for Audi. The success story, the first chapter of which was already written in the early years of automotive history with the Auto Union racing cars and which was continued in the 1980s with the groundbreaking success of quattro drive, is still developing smoothly at the start of the 21st century, too. Whether in touring car championships such as the DTM or endurance classics such as Le Mans and Sebring, Audi dominates all competitions in which the brand is represented. This goes to prove that the brand’s “Vorsprung durch Technik” is demonstrated not only on paper.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









At a Glance:

Technical Landmarks and Important Product Events at Audi AG from 1949 to 2005




1949

DKW rapid delivery van F 89 L and DKW motorcycle RT 125 W, the first Auto Union products after the war



1950

DKW F 89 P Meisterklasse Saloon and Cabriolet with two-cylinder, two-stroke engine



1951

The DKW range of passenger cars is extended with an estate car (Universal), a two-seater cabriolet and a two-seater coupé.



The DKW RT 200 is added to the motorcycles range.



1952

DKW RT 250 (this motorcycle is also suitable for sidecar operation)



1953

DKW 3=6 Sonderklasse Type F 91 with three-cylinder, two-stroke engine in saloon, estate, coupé and cabriolet versions



1954

New products on two wheels: the DKW RT 175 and the Hobby Roller scooter (with automatic transmission)



1955

The “large DKW 3=6″, Type F 93, is launched as the successor to the DKW F 91 (also as four-door saloon Type F 94)



The DKW RT 350 two-cylinder motorcycle makes its market debut.



1956

DKW off-road vehicle with four-wheel drive (referred to as the Munga from 1962)



The DKW moped “Hummel” (Bumblebee) with three-speed gearbox completes DKW’s range of two-wheelers.



1957

Auto Union 1000, an improved version of the DKW 3=6 with tuned three-cylinder, two-stroke engine



Auto Union 1000 Sp Coupé, a sporty two-seater with American styling



1958

Production of DKW two-wheelers at Ingolstadt is halted in 1958.



1959

DKW Junior, a compact, space-efficient car with a three-cylinder, two-stroke engine



1961

The Auto Union 1000 Sp now also appears as a roadster.



1963

The DKW F 12 replaces the DKW Junior. This is the first German-built car in its class to feature front disc brakes.







1964

DKW F 102, a modern-style medium-class car (with three-cylinder, two-stroke engine and front-wheel drive)



A roadster version of the DKW F 12 also appears on the market.



1965

Auto Union launches a model with four-stroke engine onto the market. Its name: Audi. Available from 1966 in various performance versions under the names Audi Super 90, Audi 75, Audi 80 and Audi 60.



1966

The last DKW F 102 leaves the production line. This brings to a close Auto Union’s long tradition of two-stroke versions under the DKW brand.



1968

The first Audi 100



1970

Audi 100 Coupé S



1972

Audi 80: the first car with self-stabilising steering roll radius, “Car of the Year”



1974

Audi 50: the first compact-class car in Germany



1976

Second-generation Audi 100, also with five-cylinder engine from 1977



First Audi 100 Avant



1978

Second-generation Audi 80, also as Audi 90 with more powerful engine from 1980



1979

Audi 200, the deluxe, high-performance sister model of the Audi 100







1980

Audi quattro: the first volume-built passenger car with permanent four-wheel drive



1982

Third-generation Audi 100, with the world-beating drag coefficient of 0.30, 1983 “Car of the Year”



1986

Third-generation Audi 80/90, first example of volume-production fully-galvanised body



1988

Audi V8, luxury-class model with 3.6-litre V8 engine with four-valve technology, 250 bhp, four-wheel drive



Audi Coupé



1990

Fourth-generation Audi 100 /Audi 100 Avant (engine range: four, five and six cylinders)



1991

Audi 80 TDI sets world economy driving record



1994

Market launch of the Audi A8, with its revolutionary Audi Space Frame ASF made from aluminium



Audi A6/Audi A6 Avant, successor model to the Audi 100



Audi A4, successor to the Audi 80



1995

Audi presents the TT Coupé and TT Roadster sports car studies



1996

Audi A3, an attractive three-door model in the compact class



1997

Audi presents the Al2 study



Audi A6



1998

Audi A6 Avant



Audi TT Coupé



1999

Audi TT Roadster



Multitronic transmission



2000

Audi A2: the first high-volume vehicle with all-aluminium body



Audi allroad quattro: a synthesis of on-road and off-road qualities



The new Audi A4 appears on the market



2001 The one millionth Audi with quattro drive



The 2 millionth Audi with diesel engine



Launch of the A2 1.2 TDI, the first four-door three-litre car in the world



Unveiling of the Audi A8 L 6.0 with a completely new W12 engine



Audi builds its 150,000th Aluminium Space Frame body



The 100,000th Audi TT Coupé leaves the production line in Györ



2002

The second generation of the A8 appears on the market



450 bhp RS6 with V8 biturbo engine, hitherto the most powerful Audi ever built



Market launch of the new A4 Cabriolet



The 2 millionth A4 is built



2003

The second-generation A3 builds on the success story in the compact class



Audi shows the Pikes Peak quattro study, the basis for the Q7, at Detroit



The Le Mans quattro study is unveiled at the Frankfurt Motor Show, becoming the basis for the R8 set to appear at the end of 2006



Audi introduces the DSG gearbox



2004

The A3 Sportback appears on the market



Market launch of the new A4 and S4



10th anniversary of the Aluminium and Lightweight Design Centre in Neckarsulm



Market launch of the A6



2005 25 years of quattro

2 millionth quattro built



Unveiling of the Q7



10 millionth engine built at Györ, Hungary



Launch of the S8 with the first 10-cylinder Audi engine



Presentation and market launch of the RS4






TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Audi in Brazil



Audi Brasil Distribuidora de Veículos Ltda.


From 1993 to 1999 Senna Import was responsible for import of the Audi products. The joint venture Audi Senna, which had the participations of AUDI AG (51%) and Senna Import (49%), was in charge of the trade of all cars, national and imported, and the after-sales affairs in Brazil in 2000.



As of March 2005, AUDI AG assumed the distributions operations of all its products in Brazil with the establishment of Audi Brasil Distribuidora de Veículos Ltda., sales subsidiary belonging 100% to AUDI AG. The new structure became valid after the acquisition of the 49% that Grupo Senna owned in Audi Senna Ltda.



Audi do Brasil e Cia.

Audi established in 1997 the subsidiary AUDI DO BRASIL E CIA. The company, based in Curitiba, in the state of Paraná, with an office in São Paulo, is a partner in the plant built in Curitiba along with Volkswagen do Brasil, where the A3 are produce for sales in the country and export to the Latin America.



Since January 2000, the marketing and sales activities for South America (except Argentina and Brazil) are coordinated by Audi’s office in Miami. The technical assistance for this region is managed by Audi do Brasil.



Audi in Brazil – a decade of sophistication and sportivity

The combination of excelent products and a bold positioning rapidly generated results: the four rings brand reached recognition among the Brazilian consumer and its models became sales success. With 1,474 units sold in 1994, in the following year Audi doubled its sales volume, reaching 3.072 sold vehicles.







The Audi models also made history in this decade of participation in the Brazilian market. On the streets as well as in the media, the vehicles that bear the distinctive of the four rings are recognized as a synonym of quality and technology. Among the many highlights are the several Best Vehicle awards received by Audi’s models.



Audi A3

„Best car in Brazil“, Compact category, 1997, 98 and 99 – Carro magazine

„Best car in Brazil“, National category, 2000, 2001 and 2002 – Carro magazine

„Car of the Year 2000“, National category – Autoesporte magazine

„Best Automobile in Brazil“ 2000 – Motor Show magazine

„Vehicle of the Year 1998/1999“, Hatchback – Automóvel & Requinte magazine

„The Best medium two volumes car“ 2002 – survey by Quatro Rodas magazine among readers

„Luxury hatchback“ 2003 – survey by Vogue magazine among Iguatemi Shopping goers

„The Best Purchase 2005“ – A3 1.8T Tiptronic – survey published by Quatro Rodas magazine



Audi A4

Imported car of the year 1996/1997 – Autoesporte magazine

The best car in Brazil in 1996/1998 – Luxury medium category – Carro magazine

„The Best Purchase 2005“ – A4 1.8T Multitronic – survey published by Quatro Rodas magazine



Audi A6

Imported car of the Year 1997/1998 – Autoesporte magazine

Best Top Car 2005 – elected by readers of Carro magazine

Imported of the Year 2005 – Top Car TV Award

Audi A6 Avant

Automóvel 2000 – Station wagon category, by Automóvel & Requinte magazine



Audi A8

Best car in Brazil 1996 – Luxury large category, by Carro magazine

The Elected of the Year (Imported Car of the Year) 1994/1995 – Quatro Rodas magazine

2003 – Top Car Award

2003 – Imported of the Year – Autoesporte magazine



Allroad

Best car in Brazil – Station wagon category – Carro magazine – 2002



The Audi brand has also been awarded many times in this period of ten years, bearing titles like „Object of Desire Brand“ in 2002, in the category Imported Automobiles, among the consumers of the Iguatemi Shopping Mall in São Paulo, and, in 2004, the most admired by the young public in Brazil in a survey by the Research International Institute.



Audi in Brasil’s Marketing activities are also examples of the brand’s pioneerism and success, becoming reference for the whole market, with awarded publicity campaigns, expositions and differenced participations in automotive fairs, including the memorable arrival of the Audi TT in an helicopter to the Motor Show in 1998, sports sponsorships like the Audi Golf Tournament, Horsejump competitions, tennis championships, Audi Oceanic Rally and Sailing Tournament. Not to mention the many cultural sponsorships that favoured the Brazilian public’s access to high level national and international attractions.



In the social field, Audi in Brazil has a strategic alliance with Ayrton Senna Institute, which offers for children the opportunity of being educated to achieve their potential. The “Education through Sports Program” is developed in 15 different cities in 12 federal states, from the north to the south of Brazil. More than 57 thousand children and teenagers have participated in this Program that uses sports as an educational tool and an instrument of personal and social development, during the period they are not at school.



Since 2005, Audi do Brasil also invests on solid partnership that dedicates their time actively in favor of our environment’s protection. The “red-tailed amazon parrot conservation project”, in the seashore of Paraná State, was created and developed by the non-governmental organization SPVS (Society for Wildlife Research and Environmental Education), aimed at protecting this species through researches, management actions and activities focused on environmental awareness targeted at the population of the region where it acts.



Audi Plant

The climax of the brand Audi in Brazil was the beginning of the production of the first Brazilian Audi A3 in the Curitiba plant. Of the 3,048 units of the Audi A3 supplied in 1999 to the Brazilian clients, 1,048 had been produced in Brazil. Of the 8,490 Audi A3 models supplied in the year 2000, only 59 came from Ingolstadt, Germany, and 8,431 from Curitiba. In 2001, 13,700 Audi A3 were produced in Curitiba, of which 11,259 were sold in Brazil and 2,550 were exported to other Latin American countries. In 2002, 10,249 units were produced in Curitiba, 9,474 of which were sold in the national market. In 2003, 8,300 units of the A3 were assembled and 7.361 were sold. The Curitiba plant produced in 2004 6,524 Audi A3 for the Brazilian and Latin American markets and sold 5,654 inside the country. Last year, Audi produced 4,475 and sold 4,228 Audi A3 in Brazil.



Business Unit Curitiba

The plant is located outside the municipal area of Curitiba in the district of São José dos Pinhais, which has 200,000 inhabitants, approximately 15 kilometres from the capital of the Brazilian federal state of Paraná. Situated quite literally in the open countryside, visitors are surprised by its modern concept and striking appearance.



The factory’s unconventional structure immediately catches the eye. A Y-shaped complex was erected on the two million square metre site which houses the production areas of the precision body shop, the paint shop and assembly in its three wings. The heart and central nervous system of the 210,000 square metre complex is the communications centre. This is where all planning, controlling and quality assuring functions of the new factory interact. It is also home to offices, a showroom and a meeting room for employees.



In contrast to other factories, all vehicles consequently pass through the communications centre on their way between the individual production areas. This means that a continuous exchange of information takes place between the production teams, the management and Quality Assurance parallel to the production process.



Organisation

The organisational structure is geared towards the special nature of a joint venture plant, which means that each brand is initially responsible for its own product. The Curitiba plant is an economically independent Business Unit.



Production

Audi’s activities in Curitiba have set a further milestone in the company’s history. The new factory’s maximum capacity was estimated at 810 units per day. It is currently operating at full capacity. 132,500 vehicles were built at Curitiba in 2004, of VW Golf, Audi A3 models and VW Fox.



The petrol engines for the 1.6 (101 bhp), 1.8 (125 bhp) and 1.8 T (150 bhp) are supplied directly from the engine plant of Volkswagen do Brasil in Sao Carlos; the 1.8 T (180 bhp) petrol engine and the 1.9 TDI are imported from Audi Plant in Györ (Hungary).



In order to meet the usually high customer expectations regarding quality and innovative technology, the Brazilian plant has been designed fully in accordance with international Audi quality standards. The production system, for example, includes several Audi ideas that are based on APS (Audi Production System) and its elements, e.g. teamwork, but that have been adapted to suit the nation’s own particular requirements. The methods and equipment that are used and the organisational and other standards that apply have been recorded in a nine-point catalogue, the Brazil Production System (BPS).



The basic BPS elements are teamwork, workplace organisation, visual management, material systems, standardised quality processes, Total Production Maintenance, problem solving and KVP.



Products

The Audi A3 manufactured in Brazil is of the same high technological standard and has the same equipment as the German Audi A3. It is supplied as a four-door model with either manual or automatic transmission to 35 Audi franchised dealers throughout the country.



Employees

With 4,300 employees, the joint Volkswagen and Audi plant in São José dos Pinhais is the top employer of all vehicle plants in Brazil. Around 90% of employees are from the Curitiba area.



The plant is also extremely well prepared as far as staff training is concerned: each employee receives 637 hours of training. The “Qualification Agreement”, signed jointly by Volkswagen and Audi with the government of the federal state of Paraná, the Paraná State Federation of Industries (FIEP) and the Paraná section of the National Industry Apprenticeship Service (Senai), paved the way for the establishment of the plant’s own Automotive Centre for staff training.



Over 300 employees were trained at Audi in Ingolstadt within the scope of special orientation programmes in accordance with the “Train the Trainer” system. In this way they were able to gain first hand experience of the production procedures and especially the high quality standards in Germany. On their return to Curitiba these employees were employed directly in the production of the first pre-series Audi A3 models to be built in Brazil, which were still manufactured on a CKD basis using imported parts.



Production process



Press shop


Just under a year after the production start-up, in September 2000, the new press shop went into operation at the plant in São José dos Pinhais. This facility supplies numerous body parts, thus ensuring the contractually specified local content.

A total of around EUR 70 million was invested in the new press shop in Curitiba, which has a capacity of 16,000 parts per day. The steel panels are supplied ready galvanised. The Audi A3 (and VW Golf) models produced in Brazil are thus covered by the same twelve-year warranty against rust perforation as all other Audi vehicles.



The steel is supplied in coils by the company Usiminas, and unreeled and cut to size by Gonvarri in Araucária (PR). The steel panels pass through the pressing line in a total of six operation sequences in which they are shaped, drawn and blanked and thus transformed into doors, roofs and bonnets. Up to 26 doors per minute can be produced at full capacity operation. These finished parts are then delivered just in time to the body shop.



The pressing process is assisted by technology not previously used in South America. Instead of using conventional robots, the parts are moved from one processing stage to the next by rails fitted with suckers. The use of these so-called “cross bars” reduces the risk of the parts being damaged whilst being transported through the presses. In addition, the fact that the pressing lines are fully encapsulated makes sure that the pressings do not come into contact with any surrounding impurities and thus maintains the quality of the blanked parts.



Body shop

The plant is one of the first to use laser-welding technology. Compared with conventional spot-welding processes this method enables higher precision and quality. The roof of the Golf, the internal reinforcement of the B-post and, separately, the roof of the A3 are processed in a total of three laser-welding booths. This technology is also equivalent to the processes used in Germany.



The precision body shop combines the panels manufactured in the press shop to produce the vehicle body. Once the under body has been welded on, the Golf, Fox and the A3 are passed on to parallel lines on which the wheel arches, side sections and the roof are fitted using laser welding processes. All bodies then pass through an automatic precision and dimensional check, which means that the production process is constantly monitored.



Most of a total of 305 robots are located in the body shop where they perform those tasks that call for maximum precision or which could pose a health or safety risk for employees. The automation rate is 40%. Once the body shells have passed through the body shop they are automatically delivered to the paint shop.



Paint shop

The paint shop in Curitiba is one of the most modern and environmentally friendly worldwide: like the Audi plants in Germany it works with water-based paints and thus makes a major contribution to reducing environmental pollution. If necessary the paint shop is able to switch between a total of 25 paint colours within a very short space of time.



The painting operation is one of the most complex in the entire vehicle manufacturing process and involves up to 27 difference sequences. After being cleaned thoroughly the body shells are given a further zinc phosphate coating and are dipped in a paint bath. The body shell and paint baths have opposing electrical charges so that the paint particles are distributed evenly across the entire vehicle and even the smallest of gaps are covered. In the next stage, in order to prevent trapped water and to protect against stone impact, under sealing (PVC) is applied evenly with the help of four robots to the entire lower area of the body and the joints between panels. The body is then sanded, the surface levelled and cleaned with ostrich feathers so that even the smallest impurities are removed from the body.



This is important for the next stage in which the surface filler is applied in a colour similar to the vehicle paintwork. The body shell is then sprayed with the customer’s chosen solid, metallic or pearl effect paint finish plus clear lacquer that adds further shine to the body and protects it against ultraviolet rays.



The painting process for the exterior parts is automated. Electrostatic spraying systems (ESTA) improve the surface quality of the paintwork and, compared with conventional processes, help to save paint. After each section the body shells pass through specific drying processes to “mature”. It takes 30 minutes for the stove enamel to mature and the vehicles spend this time in a chamber heated to a temperature of 125 – 145 degrees Celsius.



The painting process ends with the application of protective wax to seal the body cavities. Unlike other car manufacturers, Audi does not use the conventional spraying process, but a method known as “hot wax flooding”. The body cavities are flooded with hot wax, then the body is suspended and any excess wax runs off. This leaves a thin layer of wax that protects the cavities against corrosion.



Before the painted body shell enters the final assembly stage, it is stored temporarily in a high-bay warehouse with a capacity of 200 vehicles.



Final assembly

The assembly process begins with the removal of the doors and the installation of the instrument panel. The instrument panel, brake servo, cooling system, air conditioning and wiring harnesses are preassembled by the supplier on the plant premises and supplied completely ready assembled. The windows are bonded into place by the only robot in the assembly area.



Once the engine hoods and doors have been adjusted, the vehicles are subjected to electrical function tests and then move on to the geometry station where the wheels are aligned. Finally the acoustic tests are carried out in closed booths to establish the interior noise level.



Once Quality Assurance has performed the driving tests, the cars are subjected to a leakage test to check for any water penetration. The last assembly stage is known as “Counting Point 8” at which the quality team checks over the cars again and releases them for sale.



Staff working conditions has been improved considerably compared with traditional production lines. Part of the assembly work on the vehicle, for example, is performed on a conveyor line that carries the worker along with the vehicle.



Quality

Investments in staff training and state-of-the-art technologies such as laser-beam welding and water-based paint finish, which are used in the production of the A3, guarantee the same high standard of quality as in Germany. A 200-strong quality assurance team is directly involved in all production processes. Special quality centres have been set up in the body shop, the paint shop and at the final point of the assembly process.



Logistics

Curitiba Industrial Park (PIC): 15 suppliers are located on the 288,000 square metre site: Pirelli (tyres), Walker-Gillet-Tenneco (exhaust systems), Santa-Marina Sekurit (glass, windows), Delphi (wiring harnesses), Krupp M.A. (axles, chassis components), Krupp Presta (steering components), Kautex (fuel tank), Johnson Controls (seats), SAS Automotive (cock-pit), Peguform (bumpers), Iramec Autopecas (door modules), Krupp (front modules), Intertrim (doors modules), Trimtec (doors panel) and KROMBERG Schubert (eletric cable). These companies supply their components to the plant “just in time” and in the correct sequence.



Establishment

Audi and Volkswagen financed the total expenditure of over Euro 665 million. Audi provided the project management, the majority of the managerial staff and contributed Euro 150 million to the investment volume. The contractor responsible for construction work was the Brazilian subsidiary of the German group Hochtief; Stuttgarter Dürr AG was the general contractor for the paint shop.



• Audi feasibility study in early 1996

• Project start in September 1996

• Laying of the foundation stone in 1997

• Construction work commenced in June 1997. Around 3500 engineers and workers, the majority from Paraná, were employed on the construction site during the busiest construction phases.

• Over 5 million m3 of soil mass were moved during the preparatory earthwork, around 8000 concrete pillars were anchored at a depth of between 12 and 18 metres. Finally, the installation of the first equipment in the paint shop wing began in March 1999. The installations in the body shop and final assembly followed in April.



Inauguration

The plant was officially opened in mid-January 1999 by the head of state and government Fernando Henrique Cardoso in the presence of the governor of the federal state of Paraná Jaime Lerner and the Audi Chairman Dr. Franz-Josef Paefgen. 2000 guests attended.



The Brazilian automotive market

A total of 2,44 million cars were produced in Brazil in 2005. The increase of 10,7% reached last year was a result of the exportation good performance (US$ 11,2 billions, equivalent to an increase of 33,5%). The biggest car manufacturer in Brazil in the Domestic Market Sales (total of 1,36 million cars) in 2005 was the Fiat followed by GM, Volkswagen, Ford, Peugeot, Honda, Renault and Toyota.



The Brazilian automotive market has attracted considerable interest in recent years: Over 20 billion US dollars were invested in automotive and supplier plants in Brazil within ten years. Experts are warning about surplus capacities. While just a few large companies shared 95% of the market just a few years ago, Brazil has since advanced to become the country with the highest manufacturer (around 20 automobile brands) density worldwide, despite of high interest of Brazilian market.



Audi market share

Audi’s market share has developed very satisfactorily since the start of its activities in Brazil, and now detains 40,53% of market share in the premium segment in Brazil. Between 1994 and 2005, Audi sold in Brazil 69,000 vehicles. In 1999, Audi had reached the number of 4,060 sold vehicles, which in 2000 had grown to almost 10,000 units. In the year 2005, Audi sold 5153 vehicles in Brazil and exported 358 vehicles manufactured in Curitiba. In total, Audi has a circulating fleet of more than 100,000 Audi models in Latin America.



The devaluation of the Brazilian Real by almost 40% affected the sales figures for the whole of the Brazilian automotive market in 1999. Imports became dramatically more expensive – the price of cars imported from Germany increased by between 30 and 40 percent in January 1999 alone.



However, thanks to its local production content of 60% Audi was able to sever itself to some extent from this foreign-currency-indexed price increase, which made exportations more attractive.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Audi in China



Jilin Province and the Audi Changchun plant



Jilin Province




Jilin Province is located in the north-east of China, around one and a half hours by air from Beijing. It covers an area of 187,400 km_, around half the size of Germany, but accounts for only 2% of China’s land mass. Jilin is home to around 27 million people. GDP per capita in 2004 amounted to 10,932 RMB (approx. 1,093 euros). Jilin Province is part of the heavy-industry belt in the northeast of China. It shares a 232 km boundary with Russia and a boundary of about 1,200 km with North Korea. Alongside Han Chinese, Koreans and Mongolians represent the largest ethnic groups.



Changchun

The capital of Jilin Province is Changchun. During the Japanese occupation of China from 1932 to 1945, Changchun was the capital city and seat of government of the puppet state Mandchukuo set up by the Japanese under China’s last emperor Pu Yi. Modern-day Changchun is a city with around 2.7 million inhabitants. As home to the oldest and largest Chinese automotive group First Automobile Works (FAW), the city has a long tradition in car manufacturing and is the number one location in the Chinese car industry. Following an international design competition, the German star architect Albert Speer was recently awarded the contract to build a city neighbourhood dedicated to the car industry for 300,000 inhabitants, scheduled to be completed by 2015.



Distances



• Beijing approx. 1000 km

• Harbin approx. 250 km

• Shenyang approx. 300 km

• Vladivostok approx. 700 km



The Chinese car market in 2005

The booming Chinese car market



The rapid growth of the Chinese car market has continued undiminished since the People’s Republic of China joined the World Trade Organisation (WTO) at the end of 2001. Following a record year in 2003, with growth rates in excess of 70%, the Chinese government temporarily intervened by restricting loans to prevent the economy from overheating. Following brief stabilisation as a result of these measures, the car market picked up significantly again in 2005 with a growth rate of over 26%. The three million barrier for vehicle sales was passed at the end of the year.



China is now the world’s fourth largest car market after the USA, Japan and Germany. Analysts predict that China will overtake Germany as the world’s third largest car manufacturer as early as 2007.



All major car manufacturers are represented in China with their own production locations and joint ventures. The Chinese government is currently endeavouring to structure the dynamics of the market with a range of regulations and directives for its automotive policy. Plans include new taxation classes according to cubic capacity when buying a new car and regulations for exhaust emissions. In view of the country’s environmental problems and the dramatically increased demand for raw materials, the Chinese government is now also focusing on the subject of sustainability in the automotive industry.



The development of alternative drive systems and hybrid vehicles is being subsidised by the state, as are the development and establishment of independent Chinese brands. The first purely Chinese models attracted considerable public interest when they were shown at the Shanghai Motor Show and at the IAA Frankfurt Motor Show.



Audi in China in 2005

At the beginning of 2005, the VW Group changed its reporting method for China. While vehicle sales were previously counted on the basis of sales to dealers, actual vehicle sales to customers are now reported. This measure makes it possible to get a more exact picture of the number of vehicles sold in China.



2005 was an important year for China in several respects: with the successful launch of two new models, the Audi A6L and the Audi A4, Audi renewed its range of locally manufactured products. Audi sold a total of 58,878 vehicles to customers in China and Hong Kong last year. 55,944 of this total – 45,176 Audi A6 and 10,768 Audi A4 cars – were produced locally in Changchun. In addition to this, 2,184 vehicles were imported, with Audi’s top model, the long-wheelbase Audi A8, accounting for the lion’s share of this total. The A8, Audi’s flagship model, thus recorded a sales increase of approximately 77% compared with the previous year.



Despite increased competition and dynamic market structures, Audi succeeded in increasing its sales to customers in China by 9.6%. This makes Audi the undisputed leader among premium car manufacturers in China – and last year it was able to extend this lead still further. Audi enjoys a market share of over 50% in the locally manufactured premium segment. The popularity that Audi enjoys in China is also reflected in a series of awards it has received. The Audi A6L, for example, was voted “Car of the Year” by the television station CCTV-2. Other awards went to the Audi A4. In the famous JD Power Study, Audi came out on top yet again in the customer satisfaction ratings.



China – an important sales market for Audi



China is already AUDI AG’s fourth largest sales market after Germany, the USA and the United Kingdom.



Audi’s good position in the Chinese market is the result of a successful partnership stretching back to 1989, initially taking the form of the joint-venture project with the Chinese First Automobile Works (FAW) to build the Audi 100, and subsequently Audi’s inclusion in the FAW-Volkswagen joint venture for production of the Audi 200. These developments paved the way for the successful market launch of the Audi A6.



Audi cars are now a common sight on roads all over the country. The Chinese government travels in cars of the Audi brand as its official government limousines. The proportion of private Audi customers is now over 70%.



Audi’s activities in China

The Chinese partner First Automobile Works (FAW)



The First Automobile Works (FAW), founded in 1953 in the north-eastern Chinese city of Changchun, is the oldest car manufacturer in the People’s Republic. FAW comprises over 100 individual companies employing more than 100,000 people in total. Its production capacity is around 300,000 vehicles a year, of which some 200,000 are commercial vehicles and buses.



The most important milestones



1988-1996

Joint venture with First Automobile Works (FAW)



Agreements on the manufacturing of the Audi 100 under licence were signed as long ago as August 13, 1988, this date marking the conclusion of negotiations lasting one year. The Audi 100 (C3 with 1.8l 4-cylinder engine and 2.2l 5-cylinder engine, the Audi 100 C4 with 2.6l V6 and the long-wheelbase Audi V8) was assembled at the FAW Changchun plant from SKD/CKD parts kits (SKD = semi knocked down, CKD = completely knocked down). The joint venture agreement included both the technology transfer for the production and planning of the Audi 100 and the setting up of after sales support. Expertise was in addition transferred by providing training for some 500 Chinese workers at Audi in Germany. Furthermore, around 30 Audi employees were posted to Changchun to provide production support.



The supply of parts kits for the Hong Qi (“Red Flag”) by Audi was discontinued in 2003. A total of around 100,000 Hong Qi parts kits had been supplied to FAW since 1995.



Since 1996

Audi in the FAW-Volkswagen joint venture



In November 1993, the then Board Chairman of FAW and VOLKSWAGEN AG, signed a letter of intent on the integration of Audi production and a V6 engine plant into the FAW-Volkswagen joint venture, which had been established at the end of 1991. As a result of the signing of the agreements in December 1995, Audi acquired a ten percent stake in the joint venture by the name of FAW-Volkswagen Automotive Company Ltd. Volkswagen AG controls 30 percent, with FAW continuing to hold a 60 percent stake. The joint venture currently employs around 8,000 workers.



The first Audi product built by the joint venture, a modified Audi 100 with V6 engine bearing the model designation Audi 200, went into production in May 1996. The Audi 200 (facelift of the Audi 100) remained in production until summer 1999 with 2.6 and 2.4-litre V6 engines and the 1.8-litre 4-cylinder turbo power unit. The content manufactured locally at the Changchun plant was 60 percent.







The China version of the Audi A6

The version of the Audi A6 that was modified jointly by Audi and FAW for the Chinese market was brought onto the market in early January 2000. It went into production on September 6, 1999.



Around 200 Chinese engineers and skilled workers attended training courses lasting several weeks at Audi’s Neckarsulm and Ingolstadt plants in preparation for this landmark. Through a programme spanning several months, around 100 Audi employees provided support for the launch of the new A6 at the FAW-Volkswagen plant. Audi shipped ultramodern vehicle and production technology (such as laser welding and wax-flooding) to China in order to build the Audi A6 there.



The main customers were initially official bodies and government departments. However, the proportion of private customers, for the most part owners of small and medium-sized companies and successful entrepreneurs, has risen to 70% in the meantime.



The new Audi A6L was launched in China in the middle of 2005. Like its predecessor, the A6L built in Changchun is specially designed for the specific wishes of Chinese customers with its long wheelbase. In addition to 4-cylinder and 6-cylinder engine versions, an 8-cylinder version with quattro drive (A6 4.2 quattro) is now being offered for the first time.



The A6 is consequently the first current premium-class model to be specifically modified for the Chinese market and built there.







The locally manufactured Audi A4

Following the major success of the Audi A6 in China, AUDI AG has added the locally built Audi A4 to its product range. The Chinese-built A4 was first launched in April 2003. The successor model of the successful Audi A4 was presented on October 25. In this way Audi is looking to further extend its market leadership in the Chinese premium segment.



Audi sales and marketing

Audi models are sold through an exclusive Audi dealer network that has become a benchmark for the competition. Since January 2006, both the dealerships for locally manufactured Audi products and those for imported Audi models have been integrated into this sales network. More than 120 dealerships in the 85 most important cities and regions now belong to the sales network (as at February 2006). The majority of these are housed in typical Audi-style hangar buildings. As well as the locally built products, the Audi A8, Audi TT and, from the middle of this year, the new Audi Q7, the Audi allroad quattro and the A4 Cabriolet are available.



An expansion of the model range available in China is planned for 2006. The Audi Q7, which was presented for the first time in China at the Guangzhou Motor Show in 2005, is to be launched mid-year.



The Volkswagen Group has been named the official automotive partner for the 2008 Olympic Games in Beijing. Within the context of this agreement, Audi – the “Official Premium Automobile” – will supply premium vehicles for the very first Olympics to be held on Chinese soil.



With numerous initiatives in the field of cultural and sports sponsorship, Audi has further strengthened its brand image in China. The company, for example, sponsors the Beijing Music Festival and the annual Shanghai Fashion Show. The most famous ambassadors for Audi in China include the Chinese star pianist Lang Lang and the internationally successful conductor of the China Philharmonic Orchestra, Yu Long.



Audi Forum Beijing

An exclusive Audi Forum was opened in the Chinese capital Beijing in July 2003. This is the ninth Audi Forum worldwide, after cities such as New York, Paris, London and Berlin, and the first in Asia. The Audi Forum, which covers an area of around 1,000 square metres, includes an exhibition section for about nine cars, an exclusive A8 lounge, the quattro boutique and offices.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Audi Hungaria Motor Kft.



Financial



Data (IFRS)




Net Revenue – EUR 4.213 billion (2005), EUR 3.929 billion (2004), EUR 3.726 billion (2003)



Investments incl. R&D expenditure recognised as an intangible asset – EUR 439 million (2005), EUR 459 million (2004), EUR 319 million (2003)



Investments excl. R&D expenditure recognised as an intangible asset EUR 239 million (2005), EUR 256 million (2004), EUR 240 million (2003)



Issued capital- EUR 100,000 thousand (2005), EUR 100,000 thousand (2004), EUR 100,000 thousand (2003)



Production



Engines – 1,693,609 (2005), 1,480,630 (2004), 1,334,985 (2003)



Audi TT Coupé – 8,368 (2005), 14,738 (2004), 20,807 (2003)



Audi TT Roadster – 3,939 (2005), 8,851 (2004), 11,530 (2003)



Audi A3/S3 – n/a (2005), n/a (2004), 1,616 (S3, 2003)



Total cars – 12,307 (2005), 23,589 (2004), 53,606 (2003)



Gyor – metropolis on the Danube

• Gyor is situated on the Danube, 600 kilometres from Ingolstadt, halfway between Budapest and Vienna

• With 130,000 inhabitants, Gyor is the sixth largest city in Hungary

• Industry: mechanical engineering, textiles and plastics, food companies and construction

• Conveniently situated near to where Hungary borders with the Slovak Republic and Austria

• Baroque old town with numerous works of art and historic monuments



The plant

• Location: Gyor, Hungary

• Company established: February 1993

• Site with shell of production halls purchased in April 1993

• Site area: 1,659,163 m_

• Built-up area: 388,480 m_

• Good road and rail links

• Employees: 5,022 (as at: 31.12.05)

• Production of engines and engine parts as well as vehicle assembly

• Engine development centre with development activities accompanying volume production

• Production planning

• Toolmaking



Audi imports

• Audi is the market leader in the luxury and mid-size classes in Hungary, with 1,500 Audi vehicles sold in 2005

• Porsche Hungaria is the general importer

• 132 dealerships for VW Group vehicles



Establishment, expansion and production



1991-1992

180 possible locations for engine production are compared throughout Europe



25 November 1992

Audi decides in favour of Gyor in Hungary



18 February 1993

AUDI HUNGARIA MOTOR Kft. (AHM Kft.) is established as a fully owned subsidiary of AUDI AG with share capital of DM 2 million and is entered in the Hungarian register of companies on 6 July 1993 (“Kft.” is essentially equivalent to a German GmbH)



21 April 1993

Sales contracts for hall and plant site are signed with the company Rába



October 1993

The first machining facility for cylinder head production is set up



December 1993

Start of pre-series production



August 1994

The first production engines leave the assembly line



Capacity in the first construction stage: up to 750 four-cylinder five-valve engines per day; around 200 employees



12 October 1994

Official inauguration of the new engine plant





October 1995

AHM is certified to DIN ISO 9002





from 1996

Second construction stage for four-cylinder engine production: expansion of engine assembly and testing facility, installation of a production line for aluminium engine blocks



May 1996

Project decision on the production of V6 and V8 engines and the assembly of the TT Coupé and TT Roadster



September 1996

Start of production of 1.6-litre aluminium engines with two valves per cylinder





August 1997

Start of V6 engine production



October 1997

Start of V8 engine production



from 1998

Third construction stage for the production of four-cylinder engines, installation of a crankshaft and connecting rod machining line



2nd quarter of 1998 Installation of a machining line for the production of engine blocks for eight-cylinder engines





April 1998

Start of Audi TT Coupé assembly



3rd quarter of 1998

Quality management system brought into line with VDA 6.1 specifications



September 1998

Volume production of eight-cylinder petrol engines with five valves per cylinder



July 1999

Start of TT Roadster assembly



1999

Start of production of 3.3l eight-cylinder TDI diesel engines



1999

Start of project for the introduction of engine development activities accompanying production; total investment: approx. EUR 25 million



2000

Start of production of diesel engines with pump-injector technology; annual production capacity: 300,000 engines



Opening of a 28,000 square metre logistics hall with rail link



May 2001

Start of final assembly of Audi A3 models in Gyor



2001

Inauguration of the engine development centre for development activities accompanying volume production



June 2002

Inauguration of a new eight-cylinder engine production facility with an investment volume of EUR 135 million



August 2002

Capacity increase in four-cylinder pump-injector diesel engine production by 1,000 units/day



September 2003

Anniversary event celebrating “10 years of Audi Hungaria” attended by Hungary’s Prime Minister Péter Medgyessy, several Hungarian ministers, the Chairman of the VW Group, Dr. Bernd Pischetsrieder, and the Chairman of AUDI AG, Dr. Martin Winterkorn.



May 2004

The new production facilities for the connecting rod line at AUDI HUNGARIA MOTOR Kft. are put into operation.



November 2004

Development capacity is doubled with the second construction phase of the engine development centre



June 2005

10,000,000th engine built at Audi Hungaria. (The engine was installed in a specially equipped Audi TT police vehicle.)



September 2005

Inauguration of Audi Hungaria toolmaking shop



2005

Production capacity: approx. 2,700 straight-four petrol engines/day, approx. 2,500 straight-four diesel engines/day, approx. 1,400 V6 petrol/diesel engines/day, approx. 300 V8 petrol/diesel engines/day, 250 cars/day



Total investments at Audi Hungaria since 1993 (as at 12/05):

EUR 2.728 billion (incl. R&D expenditure recognised as an intangible asset)







The ideal location for quality

AUDI AG can rely on a good supply of skilled workers in Gyor. Highly qualified graduates from the University of Gyor are also available. AUDI AG purchased a completely developed plant site and an almost completed production shop with a floor area of 100,000 square metres from the company Rába Magyar Vagon-és Gépgyar Rt. in 1993. Now measuring in excess of 1,600,000 square metres, the plant site was a duty-free zone until Hungary joined the EU on 1 May 2004.



High-tech engines from Gyor

Engine production (pre-series) started as early as the end of 1993. The engine production plant in Gyor in Hungary was inaugurated in October 1994. In doing so, Audi not only safeguarded its international competitiveness, it also created a strategic base in Hungary that is gaining increasingly in importance. Gyor now produces almost the entire range of Audi engines. Production started with the four-cylinder five-valve engine with a displacement of 1.8 litres, in both naturally aspirated and turbo versions. V6 engines with a capacity of 2.4, 2.8, 3.0 and 3.2 litres have also been built at Gyor since 1998.



The volume production of 4.2 and 3.7-litre V8 engines was started at the end of 1997. By this time, diesel engines with pump-injector technology were also produced at Gyor. In 2002, the engine range was expanded by the addition of a new engine generation with FSI petrol direct injection. September 2005 saw the start of the volume production of modern 4.2-litre FSI “high-revving” eight-cylinder engines.



In 1999, the production barrier of one million engines was passed. In June 2005, the ten millionth engine since the start of volume production left the production line. This engine was installed in a specially equipped Audi TT police vehicle. A total of 1,693,609 engines were built for the Audi and Volkswagen Group brands in 2005.



A total of 22 basic engines in around 366 variations of four, six and eight-cylinder units are produced at the Gyor plant.



Audi Hungaria’s objective is to continually extend manufacturing penetration and to produce an increasing number of engine components in Gy_r. The new connecting rod line for four-cylinder diesel engines was put into operation at Audi Hungaria in May 2004.



Production technology and logistics at Gyor

Production technology and logistics are process-chain oriented. The machined parts leave the line at the point at which they are required for assembling the engine. This results in short distances. The supply to the production areas and the transportation of assembled parts is quick and direct. The internal flow of materials is controlled in such a way that only those parts that are directly required in assembly are made available. Expensive intermediate stores are no longer necessary and unproductive work stages are avoided.



The shipping of materials and engines between Gyor and Ingolstadt is carried out by rail. The supplied parts and components for the plant in Hungary are packaged in Ingolstadt and are shipped by rail to Gyor. The finished engines and vehicles are then sent back to Ingolstadt by rail. 28 trains a week travel between Germany and Hungary. With minimum journey times, freight transportation is thus environmentally friendly and cost-effective.



Vehicle assembly

1997 saw the start of preparations for vehicle assembly at the Gyor plant. Volume production of TT models began in April 1998. By the end of 2005, 265,241 of the Audi TT Coupé and TT Roadster and 36,458 Audi A3 and Audi S3 models had rolled off the assembly lines there.



The Audi TT Coupé and Roadster are assembled in cooperation with Ingolstadt in a 35,000 square metre hall at the Gyor plant. Highly qualified employees who have completed specialist training work on TT production in three shifts. Over EUR 35 million has been invested in this production area.



The body shells, which have already been painted in Germany, are brought by train from Ingolstadt to Gyor where they are delivered to the assembly hall.



Audi has systematically realised a new, process-oriented production concept at the plant – with short distances and fast, direct flows, from the delivery of parts to the transportation of the assembled vehicles. The customer/supplier principle applies.

When the car leaves the 240-metre assembly line after 65 work cycles and eight hours, it just has to be filled with petrol and oil and the ignition key turned. Then the brand new Audi TT is ready for its maiden journey outside in the big wide world. After leaving the assembly hall, the car is sent to the plant’s own test and torture track. There its brakes, suspension, shock absorbers and accuracy of fit are tested in practice. The finished vehicles leave Audi Hungaria by rail again and are taken back to Ingolstadt.



Due to the lasting success of the modified Audi A3 and the launch of the new A4, the Ingolstadt plant reached its capacity limits. The company management therefore decided to have the A3 assembled at the Gyor plant as well for a limited period. The assembly of the A3 started in April 2001. 36,458 Audi A3 and Audi S3 models were built up to April 2003.



Toolmaking

Following a Group-wide search for a suitable location in Central and Eastern Europe, Audi Hungaria was chosen in 2005 as the site of the new toolmaking shop. A production hall covering an area of 18,000 square metres was constructed as part of the investment of some EUR 40 million. Equipment for the press shop and body shop is manufactured there. Highlights from a production technology viewpoint are the large presses with a maximum closing force of 25,000 kN (kiloNewton) and a maximum tool weight of 50 tonnes.



The toolmaking shop’s capacity is 150,000 hours/year. After completion of its final phase in 2008, its capacity will be approaching 500,000 hours/year. As a manufacturer of body components for small-series vehicles, the toolmaking shop commenced production of body components for the pre-production series of the Audi RS 4, one of the Audi Group’s top models, in mid-2005.



In future, the toolmaking shop will execute contracts on behalf of the other brands of the VW Group as well as for the Audi Group. At present there are 170 employees working on a three-shift basis at the Gyor toolmaking shop. This will rise to 320 employees once the project has been completed.



Development and planning



The new Technical Centre was officially opened in June 2001. It was built on the extended plant site of Audi Hungaria and covers a surface area of 5,000 square metres. The building complex houses not only the engineering centre, but also an engine test facility and engine workshops. Construction work commenced in November 1999; the building complex was completed just one year later. The heart of the development centre is the test rig building with the latest generation of test rig technology. Both testing capacities and the number of jobs doubled in 2004 when the second construction stage of the development centre was completed.



Development engineers and specialists from the fields of production planning and information technology work in the Technical Centre. Investments total over EUR 25 million.



The engine development centre supports the production of engines at Audi Hungaria with on-site development activities accompanying production. The development engineers receive their job orders from the divisions of Engine Production at Audi Hungaria and Engine Development at AUDI AG.



Production planning involves the planning and supervision of existing engine production and the design and start-up of new production lines and facilities.



Construction work on the south building for incoming freight and the Audi Hungaria Forum was completed in 2003, the same year in which the extension of Hall G10 commenced. Numerous company events are held at the Audi Hungaria Forum.



The workforce at Audi Hungaria

Administration and production staff are organised into teams. For this reason, as well as professional qualification, knowledge of foreign languages and work experience, the employee selection process places emphasis above all on team and social skills. The selection itself takes place at Assessment Centres.



As at AUDI AG, payment is on the basis of a standardised, performance-oriented remuneration system which includes a variable, performance-dependent bonus in addition to the basic wage.



Employees are managed on the basis of goal-setting and self-management. Performance goals and processes are agreed jointly by employees and their superiors The goals set refer to quality, productivity, reliability of deliveries and economic efficiency. Targets and actual figures for the teams are displayed on boards where everyone can see them.



The employees’ commitment and further qualification are promoted. The company supports personal and professional training with a wide range of further training measures.



Environmental protection



Environmental protection is as important a goal at Audi as quality and productivity, and is part of the company’s strategy. For this reason, the company introduced environmental management, based on EMAS, in 1999 that has been accredited by an independent expert. All processes are structured and adapted accordingly. A new waste disposal concept was devised and introduced at Audi Hungaria. In 2005, Audi Hungaria was awarded the EMAS prize for its outstanding achievements in the field of environmental protection.



The environmental awareness of employees is promoted and environmentally friendly product strategies advanced. The company was awarded the environmental profit prize from the EU in 2001 and 2004 for “clean production”.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Audi AG Ingolstadt Plant



AUDI AG – a company with tradition



The roots of AUDI AG extend back to 1899 when businessman August Horch opened his first workshop. In 1904 he established August Horch Motorwagenwerke AG in Zwickau, Saxony. Five years later, following a disagreement, he established the company Audi, the Latin translation of his name Horch (which means “hark” in German). The Audi logo of the four linked rings dates back to 1932 when the brands Audi, DKW, Horch and Wanderer merged to form AUTO UNION AG, which had its head office in Chemnitz. The dramatic decline in car production during the Second World War marked the end of AUTO UNION AG in 1945.



A new start was ventured four years later with the founding of AUTO UNION GmbH in Ingolstadt. In 1958 Daimler-Benz AG acquired a large percentage of the share capital. This was doubled by 1964 and half of it taken over by VOLKSWAGEN AG. Two years later AUTO UNION GmbH became an almost fully owned subsidiary of Volkswagen. In 1969 AUTO UNION GmbH merged with the Neckarsulm-based company NSU Motorenwerke AG to form AUDI NSU AUTO UNION AG. This name was clearly too long, and so the company came to its present-day name AUDI AG in 1985.



Ingolstadt – an overview of the plant

The Audi Ingolstadt plant is situated at the heart of Bavaria, the German federal state with the strongest economy. The Ingolstadt plant is not only the company’s biggest production facility, it is also still home to the head office and Technical Development Division of AUDI AG. AUTO UNION AG was already entered in the Commercial Register of Ingolstadt in 1949.



The city now has a population of more than 120,000 inhabitants. The company started out by producing motorcycles, delivery vans and spare parts in the old Ingolstadt fortress. With 31,337 employees (as at 31.12.2005) Audi is today the region’s biggest employer.



AUDI AG achieved not only a new sales record for the tenth time in succession in 2005 with 829,109 vehicles sold; it also set a new production record, manufacturing more than 811,000 Audi vehicles (+3.4 percent). Around 510,000 vehicles produced in the Audi A3 and Audi A4 model lines at the Audi plant in Ingolstadt contributed towards this new record – the first time the half million mark had been passed.



829,109 cars were sold to customers worldwide, equivalent to an increase of 6.4 percent. Historic record figures were recorded for sales in 39 markets worldwide. The largest individual export market is the USA with 83,066 units (77,917, up 6.6 percent), followed by Great Britain with 81,374 (77,882, up 4.5 percent) and China with 58,878 (53,702, up 9.6 percent).



The highest growth rate among the major European markets was achieved by Spain, which recorded an increase of 13.0 percent to 49,453 units (43,764). Next in the list of the markets boasting the highest growth rate was France with an increase of 10.1 percent to 41,498 (37,676) and Italy with an increase of 10.0 percent to 55,574 units (50,500). Audi sold 247,125 vehicles in Germany, 12,033 (5.1 percent) more than in 2004.



The positive development in Eastern Europe continued in 2005 with growth of 19.9 percent; Audi recorded an outstanding result in Russia in particular, with growth of 49.1 percent to 6,115 units (4,100).







Production

The assurance of vehicle quality at AUDI AG begins with the company’s own tooling shop. The development and manufacture of press tools for complex aluminium exterior body parts and galvanised and high-strength metal panels, complete body manufacturing and folding devices and assembly jigs guarantees top quality at every production stage.



As well as Audi, the Toolmaking Division, which was set up in 1993, supplies other car manufacturers both within and outside the Volkswagen Group. In May 1999 the Audi toolmaking shop became the first of its kind worldwide to be certified in accordance with Directive 6.4 of the Association of the German Automotive Industry (VDA) by TÜV Süddeutschland. In 2002 it was certified both in accordance with VDA 6.4 and ISO 9001:2000. In 2004 the Toolmaking Division was awarded the title “Toolmaking Shop of the Year” in the competition “Excellence in Production”. The Audi Toolmaking Shop currently employees around 1,420 people at the four locations Ingolstadt, Neckarsulm, Barcelona (Spain) and Györ (Hungary).



The Audi press shop in Ingolstadt processes around 1,400 tonnes of sheet metal a day. This is used to manufacture some 2,100 cars. The metal cuttings are fully recycled. The press lines exert a total force of up to 73,000 kN, equivalent to 73,000 tonnes or the weight of 100,000 people. Although the presses are specially damped and mounted on concrete platforms, the vibrations can be felt all the way to the Audi Forum Ingolstadt. The entire body of an Audi manufactured in Ingolstadt consists of fully galvanised panels. This means that Audi is able to offer a twelve-year guarantee against rust perforation.



The plant site of AUDI AG in Ingolstadt covers an area of 2,060,214 square metres. Just under 860,000 square metres of this are built-up; the site has a useful area of around 1,700,000 square metres. Apart from AUDI AG’s Technical Development Division, the production area with press shop, body shop, assembly and plastics production and the paint shop are also located on the site.



The plant site is also home to the Training Department which provides basic and further training.



Technical Development

The tasks performed by AUDI AG’s Technical Development include the development of engines (power units and transmissions), design, body and chassis development, all the way to the development of the total vehicle.



The crash tests for vehicle safety are also part of Technical Development, as are the wind tunnel and the EMC measuring hall, where the electronics of the vehicle are tested for electromagnetic compatibility, and the proving ground in Neustadt an der Donau.



4,236 employees work in Technical Development, which covers an area of 127,400 square metres: about one third of these are blue-collar workers and two thirds white-collar employees; 61 percent of the latter are engineers. The engineer workplaces cover an area of around 50,000 square metres. More than 42,000 square metres are occupied by workshops, and at least 35,000 square metres are taken up by test rigs.



The Electronics Centre was opened in 2003. This transparent, open-plan building concept comprising office, laboratory and workshop areas is where all sections of the company dealing with electronics come together. The seven-storey, terrace-shaped building complex provides working space for 750 employees from the areas of Electronics Development, Purchasing, Quality Assurance, Production Preparation, Service and Controlling. The Electronics Centre houses numerous measuring and testing facilities for vehicles, e.g. a climatic test chamber for weather and road simulations, a light tunnel, an MMI laboratory (Multi Media Interface) and a sound laboratory for the development of hi-fi concepts. There are also various testing facilities for networked electronic components.



In 2004 the latest section of the Physikum building was completed. The Physikum has been extended in several construction phases since the foundation stone was laid in 1993 and comprises five modules. The arrangement of office space directly adjacent to workshops, laboratories and test rigs makes for ideal working conditions for the intensive development of total vehicle characteristics. Even before the first prototypes are driven on the road, individual components and later complete vehicles are operated, measured and analysed on the test rigs. The acoustics of the vehicle, for example, are tested on a roller dynamometer. Performance and consumption are measured on a flat-track test rig and a road simulator tests the long-term durability of test vehicles in quick motion within just a few weeks.



Since early 1999 the Ingolstadt plant has had its own Wind Tunnel Centre, comprising two test rigs: the aerocoustic wind tunnel and the thermal wind tunnel. The aeroacoustic wind tunnel is the world’s quietest and, at the same time, “fastest” vehicle wind tunnel. It utilises ultramodern ground simulation technology which exactly reproduces road conditions with rotating wheels and a moving belt. Here, Audi’s lead in the field of aerodynamics is extended still further to make Audi vehicles even quieter and even more attractive. The thermal wind tunnel is used to develop cooling systems. A further climatic wind tunnel which is currently being built will extend the range of facilities from 2007.



Since 1995 Technical Development has been able to test new developments in a wide range of driving situations on Audi’s own proving ground in Neustadt an der Donau. Measurements relating to performance, fuel consumption, noise level, temperature and braking are recorded on a 4.6-kilometre oval track with three lanes and two banked curves. Here, Audi vehicles are put through their paces on various surfaces such as rough asphalt, ruts, bumps, joints between concrete-pavement slabs, expansion joints, lines of nails and longitudinal grooves. The acoustics measuring track is used additionally for measuring exterior noise. Hill starts and towing and braking performance with a trailer, for instance, are tested on a special hill comprising eight test lanes with different gradients of between eight and 30 percent leading to the top. Even ice and snow conditions can be simulated with the aid of special surfaces and sprinkling.



Tests are also carried out on roads with different surfaces. Front-wheel, rear-wheel and quattro drive are tested on gravel, for example. Test sections with a “Belgium pavement” surface, undulated concrete, humps and a level crossing are also available. In 2002 an ultramodern Corrosion Protection Centre with salt-water, mud and splash test sections was set up on the proving ground. In 2004 a new test section was set up with various surfaces for simulating good and poor road conditions.



Audi Electronics Venture GmbH

AUDI AG founded the 100 percent subsidiary Audi Electronics Venture GmbH (AEV) in 2001 for the development of innovative key technologies in the field of software and electronics. The AEV has its headquarters in Gaimersheim and has a share capital of EUR 500,000.



The objective of the AEV is to introduce innovative functions which comply with Audi quality standards into series production. This is achieved by means of in-house software development on the one hand and through partnerships, participations or joint ventures, especially with small, flexible high-tech companies, on the other.



Image processing systems which also include the third dimension are the focus of cooperation with the company PMDTechnologies GmbH in Siegen, for example. Thanks to its ability to capture the third dimension, the PMD sensor system is one of the key technologies for fulfilling the vision of the accident-avoiding car. The innovative driver assistance functions on the basis of PMD technology will significantly improve comfort in the car as well as road safety for both the car’s occupants and pedestrians. The subjects of suspension control systems and sensor fusion are the main focus of cooperation with NIRA Dynamics AB, Linköping, Sweden.



Walter Streit, Managing Director of AEV, names further areas of expertise: “We are working intensively on the task of integrating software packages into the car. Other areas of activity include bus systems and electronics architecture.”



The Logistics Centre (GVZ)

Due to the extremely wide variety of versions and the setting up of worldwide production and procurement networks, the logistics processes of car manufacturers have become tremendously complex. New approaches are required in order to manage these processes. One such approach is the consolidation of material flows in industrial parks. Systems and modules are assembled outside the car maker’s factory gates and delivered to the assembly line just in sequence. This concept is also the basic philosophy behind the Logistics Centre, or “GVZ” as it is commonly known, at AUDI AG’s Ingolstadt plant.



In 1995, Audi began to locate the first suppliers in the direct vicinity of its plant site in Ingolstadt. The Logistics Centre was completed in just 18 months – from the start of planning to the commencement of work in its halls. Industrie-Fördergesellschaft (IFG), a fully owned subsidiary of the city of Ingolstadt, is the investor and “owner”. The initial construction phase consisted of two halls with a total floor area of 30,000 square metres. The Logistics Centre now occupies a site of 75 hectares comprising ten halls covering a total area of over 170,000 square metres. Moreover, Audi has the option of extending the Logistics Centre by another two halls with a total area of 40,000 square metres.



Environmental awareness, a fast flow of information and short distances for transportation are the most important features of modern logistics. The fact that the Logistics Centre in Ingolstadt is located right outside the factory gates is therefore no coincidence, but the result of transport studies – and is, moreover, in the interest of the city of Ingolstadt.



The advantages of the Logistics Centre for Audi are above all the guarantee of supply, the ability to deal with complexity and the reduction in logistics costs, divided into transport, packing, inventory and IT costs. As well as reducing environmental pollution, for example by cutting the number of trucks used for transporting freight, the Logistics Centre also strengthens the economy of the city of Ingolstadt and creates new jobs.



However, the Logistics Centre also offers trucks a convenient link to the German autobahn network. Transport in the local area is concentrated at the Logistics Centre and performed using low-emission vehicles. System suppliers and logistics service providers no longer require trucks to supply the Audi production line. Materials are delivered directly to the assembly lines exclusively by electric tractor. These vehicles make the journey across the 415 metre bridge, which is completely covered over, directly to the production area around the clock, some 1,000 times a day.



The Logistics Centre consists of several modules: a container terminal, the ten halls including hotel, the connecting bridge and a truck park with filling station. The container terminal is used for moving freight in containers, but also for loading and unloading conventional car transporters. The station has several shunting and loading tracks, each measuring 350 metres in length.



The module suppliers manufacture their assemblies “just in time” in five assembly centres, and are personally responsible for delivering them to the assembly lines using their own staff and means of transport. A total of more than 20 external suppliers and service providers currently supply Audi via the Logistics Centre. These are primarily suppliers who manufacture highly varied and complex components and systems, and who demand the highest of standards with regard to control systems. For example, a wiring harness for an Audi model has more than 1.2 million theoretical versions. The complexity of such processes can only be handled by creating the different versions as late as possible, just before installation, and by direct and in-sequence delivery to the assembly line. Other parts that are suitable for assembling at the Logistics Centre are high-volume modules that are difficult to transport – fuel tanks, exhaust systems or front end modules, for example.



The Logistics Centre also has three distribution centres in which, for example, the material-handling point for the Hungarian plant at Györ and the CKD (completely knocked-down) packing facility are housed. Halls J and K, however, are not logistics or assembly halls, but house Audi Tradition, the Audi After Sales Service Training Centre and the GVZ hotel. Having started out in 1995 with 415 employees, around 2,400 people are now employed at the Logistics Centre.



Audi is interested in a logistics centre with potential for extension, in integrating further suppliers and centralising service operations – but not only at its Ingolstadt plant. The very positive experience acquired in Ingolstadt has also been transferred to the plants in Neckarsulm, Györ (Hungary) and Curitiba (Brazil). Corresponding industrial parks have also been set up in the direct vicinity of or on the premises of these plants. Industrial and service parks have consequently become a fixed and indispensable part of Audi’s logistics and service concepts.



Environmental protection in Ingolstadt

Environmentally compatible production is a corporate goal for Audi and high emphasis is placed throughout the company on putting this into practice at individual production sites.



So that the goal of environmental protection does not remain a “paper tiger”, Audi is a voluntary member of the European Community system based on the Eco-Management and Audit Scheme EMAS II which demands further requirements of environmental management than those laid down in current environmental regulations.



In 2000, the Ingolstadt plant in addition received accreditation according to the international standard ISO 14001. According to the requirements of this standard, the environmental management system has to be examined by an external inspector every year.



In 2005, too, a successful inspection audit in accordance with the EU Eco-Management and Audit Scheme and simultaneous recertification according to the IS0 14001 standard officially confirmed that Audi has a smoothly functioning environmental management system in place.



The crux of Audi’s environmental policy is not only the conservation of resources and minimising pollution: open communication and the integration of all employees into the company’s environmental protection strategy ensure the permanent attainment of environmental goals. To this end, the Audi Production System (APS) was used intensively last year to implement numerous environmental aspects and Audi’s environmental policy at all levels including the assembly line.



In order to save water, Audi is increasingly using rainwater at its Ingolstadt plant. For this purpose, rainfall is collected in underground cisterns from an area covering a total of 380,000 square metres. By 2002, three large rainwater retention tanks with a total volume of almost 10,000 cubic metres had been installed at a cost of EUR 6.7 million. A further rainwater retention tank with a capacity of 2,900 cubic metres is currently under construction. Rainwater gathered in this way is processed in the internal pre-treatment facility and fed into the production water network, thus replacing valuable drinking water. In 2005, the amount of rainwater used at the Ingolstadt plant totalled 185,000 cubic metres due to construction measures. In 2004 the volume of rainwater used had been as high as 213,000 cubic metres.



In the interest of environmental protection – especially to reduce carbon dioxide emissions – and cost-saving, it has become an urgent requirement to save primary energy sources. How modern technology can help in this respect and save money in the long term has been demonstrated by a project set up at the Ingolstadt plant in January 1999: two powerful gas turbines generate not only warmth for heating, but also electricity and cold air as required. Audi has invested some EUR 20 million in the new Energy Station West. The technology is designed in such a way that electrical energy is generated from the input of the primary energy source of natural gas. At the same time, heat is recovered from the combustion of waste gases produced, which is used both as steam and heating energy.



Heat is needed in the automotive industry not only to keep the production halls and the offices pleasantly warm in the winter. A large part of the heat energy is used for the new paint shop, which in high summer requires both cold and heat for tempering and drying the paints. As a result of the high level of efficiency of approx. 80 percent for the entire facility and a utilisation factor of around 7,500 full load hours per year, both the consumption of natural gas as well as the emissions of carbon dioxide are reduced by 25 percent compared to conventional ways of producing energy.



The latest project for reducing the emissions of CO2 at the Ingolstadt plant is the use of the district heating supply from the waste recycling plant (MVA) in Mailing. Since the beginning of 2004, Audi has obtained an annual average of around 65,000 Megawatt hours of district heating from the MVA. This heat is produced from the thermal reprocessing and disposal of waste as a “bi-product”. Through the use of district heating, Audi can save approximately 13,000 tonnes (exactly 12,870 tonnes for 65,000 Megawatt hours) of CO2 a year, around 13 percent (based on CO2 emissions from heating houses and combined heat, power and refrigerating plant (CHPR)) of the total CO2 emissions at the Ingolstadt plant. In 2004 all the necessary conditions were satisfied in order to participate in the emissions trading system for greenhouse gases in effect since 1 January, 2005.



Under the Greenhouse Gas Emissions Trading Scheme (ETS), Audi is obliged to take part in the trading of greenhouse gas emissions.



In the initial trading period 2005 to 2007, two heat-generating/power-generating facilities – the Heating House East/West and the CHPR – come under the category of plant that qualify for emissions trading. Emissions trading in this period is limited exclusively to the greenhouse gas CO2. The application for emissions certificates from the German Emissions Trading Office (DEHSt) took place on time and in accordance with the German Allocation Act (ZuG). The process was carried out exclusively using electronic means and an electronic signature. The mandatory certification for this had taken place in advance.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Ingolstadt Logistics Center (GVZ)



Efficient logistics

Due to the extremely wide variety of versions and the setting up of worldwide production and procurement networks, the logistics processes of car manufacturers have become tremendously complex. Suitable approaches are required in order to manage these processes. One such approach is the consolidation of material flows in industrial parks. Systems and modules are assembled outside the car maker’s factory gates and delivered to the assembly line just in sequence. This concept is also the basic philosophy behind the Logistics Centre, or “GVZ” as it is commonly known, at AUDI AG’s Ingolstadt plant.



In 1995, Audi began to locate the first suppliers in the direct vicinity of its plant site in Ingolstadt. The Logistics Centre was completed in just 18 months – from the start of planning to the commencement of work in its halls. Industrie-Fördergesellschaft (IFG), a fully owned subsidiary of the city of Ingolstadt, is the investor and “owner”. The initial construction phase consisted of two halls with a total floor area of 30,000 square metres. The Logistics Centre now occupies a site of over 60 hectares, comprising ten halls with a total floor area of more than 170,000 square metres. Moreover, Audi has the option of extending the Logistics Centre by another two halls with a total area of 40,000 square metres.



Environmental awareness, a fast flow of information and short distances for transportation are the most important features of modern logistics. The fact that the Logistics Centre in Ingolstadt is located right outside the factory gates is therefore no coincidence, but the result of transport studies – and is, moreover, in the interest of the city of Ingolstadt.



The advantages of the Logistics Centre for Audi are above all the guarantee of supply, the ability to deal with complexity and the reduction in logistics costs, divided into transport, packing, inventory and IT costs. As well as reducing environmental pollution, for example by cutting the number of trucks used for transporting freight, the Logistics Centre also strengthens the economy of the city of Ingolstadt and creates new jobs.



The Logistics Centre offers trucks a convenient link to the German autobahn network. Transport in the local area is concentrated at the Logistics Centre and performed using low-emission vehicles. System suppliers and logistics service providers no longer require trucks to supply the Audi production line. Materials are delivered directly to the assembly lines by electric tractor. These vehicles make the journey across the fully covered 415 metre bridge directly to the production area around the clock, some 1,000 times a day.



The Logistics Centre consists of several modules: a container terminal, the ten halls including hotel, the connecting bridge and a truck park with filling station. The container terminal is used for moving freight in containers, but also for loading and unloading conventional car transporters. The station has several shunting and loading tracks, each measuring 350 metres in length.



The module suppliers manufacture their assemblies “just in time” in five assembly centres, and are personally responsible for delivering them to the assembly lines using their own staff and means of transport. A total of more than 20 external suppliers and service providers currently supply Audi via the Logistics Centre. These are primarily suppliers who manufacture highly varied and complex components and systems, and who demand the highest of standards with regard to control systems. The complexity of such processes can only be handled by creating the different versions as late as possible, just before installation, and by direct and in-sequence delivery to the assembly line. Parts that are suitable for assembling at the Logistics Centre include high-volume modules that are difficult to transport, for example fuel tanks, exhaust systems or front end modules.



The Logistics Centre also has three distribution centres in which, for example, the material-handling point for the Hungarian plant at Györ and the CKD (completely knocked-down) packing facility are housed. Halls J and K, however, are not logistics or assembly halls, but house Audi Tradition, the Audi After Sales Service Training Centre and the GVZ hotel. Having started out in 1995 with 415 employees, around 2,400 people are now employed at the Logistics Centre.



Audi is interested in a logistics centre with potential for extension, in integrating further suppliers and centralising service operations – but not only at its Ingolstadt plant. The very positive experience acquired in Ingolstadt has also been transferred to the plants in Neckarsulm, Györ (Hungary) and Curitiba (Brazil). Corresponding industrial parks have also been set up in the direct vicinity of or on the premises of these plants. Industrial and service parks have consequently become a fixed and indispensable part of Audi’s logistics and service concepts.



Major external suppliers and service providers who supply Audi via the Logistics Centre:



Supplier, Main parts/assemblies supplied, Model




Dräxlmaier, Wiring harnesses, A3/A4

EME, Wiring harnesses for engine compartment, roof, etc. , A4

Faurecia, Front end, exhaust system for A3 quattro, A3/A4

Seeber, Door trims, A3/TT

Kautex, Fuel tanks, A3/A4/TT

Visteon, Fuel tank (quattro), A3/TT

Montes, Air filters, various order picking, A3/A4

Carcoustics, Door insulation, A3

Rehau, Bumpers/sill trims , A3/A4

Peguform, Door trims, bumpers, A3/A4, A4/S4

Lear, Headlining for 3-door A3, A3

Intier , Headlining for A3 Sportback, A3

VW Braunschweig, Suspension struts, pivot bearings, rear axle, A3/A4

VW Kassel, Exhaust systems, A3

Tenneco Automotive, Exhaust systems, A3

Scherm, In-sequence delivery of fuel tanks/mini-load operations, A3/A4/TT

Rudolph, Order picking for Györ, Engines/TT

TDS, CKD packing, A4


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









Audi Neckarsulm Site



The site



The AUDI AG site at Neckarsulm, Baden-Württemberg, Germany is the largest employer in the Heilbronn-Franconia region with a staff of 13,633 (as at 31.12.2005). Of this total, 10,348 are blue-collar workers and 2,488 office staff. There are in addition 797 apprentices employed at Neckarsulm. The city of Neckarsulm, named after the Neckar and Sulm rivers, has a population of around 27,000 and provides nearly 30,000 jobs (including Audi). Automotive engineering is the region’s hallmark, with a number of suppliers moving to within close vicinity of the Audi plant in the last few years: the Bad Friedrichshall industrial park opened in 1996 and was extended in 2003 when a fourth building was added. In 1999, the Logistics Centre at Offenau was created, followed by the industrial park at Heilbronn’s river port in 2003. In 2006, the site will celebrate 100 years of car production at Neckarsulm.



The Audi Neckarsulm site covers an area of about one million square metres, 90 percent of which are built-up. In addition to car manufacturing, the site houses Technical Development, the Audi subsidiary quattro GmbH and the Audi Forum Neckarsulm.



Production

The manufacturing facilities at the Neckarsulm site comprise a press shop, steel and aluminium body shops, a paint shop and assembly lines. A total of 241,070 cars came off the assembly lines at Audi’s Neckarsulm plant in 2005, including 10,026 of the Audi A2 (end of production: July 2005), 204,678 of the Audi A6, 4,295 of the allroad quattro (end of production: July 2005), 556 RS 4 and 21,509 Audi A8 models. In addition, the Lamborghini Gallardo receives its paint finish at the Neckarsulm paint shop.



Audi A6 production

In March 2004, AUDI AG presented the new Audi A6 to the public. This was followed by the launch of the new A6 Avant exactly one year later. The sixth generation of this very successful model line, with over five million units produced, is manufactured in Neckarsulm. For the new model, AUDI AG invested a total of around EUR 530 million in its Neckarsulm site.



About 60 percent of the Neckarsulm workforce is employed in A6 production or directly related areas, making the A6 an essential success factor for both Audi and the site. A production record was set for the first time in October 2005, with more than 800 cars a day coming off the assembly line. In terms of production quality, the Audi A6 sets new standards – thank to its highly automated and innovative body construction, for example. Audi invested EUR 80 million in a new building and EUR 180 million in new body manufacturing plant.



Plant technology requirements have grown due to the use of even stronger steels, composite construction using steel and aluminium and the increased use of combined spot welding/bonding. About 95 percent of the processes in the new body shop are automated. Today, around 600 robots are in operation on the assembly lines, up from 450 for the previous model. The combination of various joining technologies (resistance spot welding, punch-riveting, clinching, combined spot welding/bonding, laser welding, laser brazing and MIG brazing) produces a high level of crash safety, optimum natural frequency behaviour and high body rigidity on the new Audi A6. Stainless steel was used for the first time in A6 body manufacturing.



Audi spent EUR 140 million alone on tools for making the body parts for the A6. Most notably, the large-area outer body panel sections for the A6 are produced in the Neckarsulm press shop. Audi spent some EUR 9 million on converting the painting facilities for the A6. A new pre-treatment line, for example, was built to handle composite steel and aluminium structures.



Over EUR 40 million were invested in new plant technology for the A6 assembly line. In response to innovations in electrics/electronics, testing processes have been restructured. The front-end module with the single-frame radiator grille is installed with the aid of a pneumatically assisted handling device. Cockpit installation is semi-automated, and the windows of the A6 are fitted by robots as well.







Audi A8 production

For more than ten years now, Audi has been using aluminium in volume production, thus setting the standard as a pioneer of this material in production as well. As early as 1993, Audi implemented its Audi Space Frame ASF concept – specially developed for aluminium bodies – on the A8, and refined it at a later date for the Audi A2 and the new Audi A8. Some 170,000 of the Audi A8 have been produced since, an area that employs around 900 people.



Audi has acquired unparalleled expertise in the use of this lightweight material. For example, the degree of automation in aluminium body construction has reached 80 percent – the same as in steel body construction. Experience gained from the Audi A2 made it possible to further optimise manufacturing technologies for the A8. Audi has been using significantly more cast parts and multifunctional extruded profiles, markedly reducing the number of parts needed to build a car body as a result. Production has accelerated and the body has become more rigid and thus even safer as a result. The first A8 already needed about one third fewer parts compared with a traditional steel body, and this figure was reduced by a further 16 percent on the new Audi A8. Two examples: while the B-post on the first A8 generation was made of eight components, a single cast part fulfils the same function on the new A8. Likewise, the side panel frame, formerly consisting of seven parts, is today manufactured from a single sheet of metal. Audi also employs the joining technologies of the A2 on the A8. Another innovation was introduced in the form of hybrid laser-MIG welding, combining the advantages of both technologies for the first time. The use of sensor technology in welding simplifies monitoring processes in manufacturing. The introduction of quickly hardening alloys makes separate heat treatment redundant and saves both money and production time. These enormous advances in body construction have been made possible by the close link between development and production at a single site. The systematic application of lightweight construction has helped to achieve a marked reduction in fuel consumption, while further improving comfort, performance and safety at the same time. In the luxury car segment, the Audi A8 is the only saloon car with four-wheel drive (quattro) and a lightweight aluminium body. Torsional stiffness on the A8 is up by 61 percent compared with the previous model. This allows drivers to benefit from a clear increase in agility and comfort – making the A8 the world’s sportiest luxury saloon car.



After eight years, the third and last construction stage of the new paint shop was completed in October 2000. The total overhaul of the site’s paint shop cost over EUR 300 million, making it the largest investment in the history of the plant. The requirements that the paint shop had to satisfy had risen due to an expanding model range and the increasing percentage of cars with an aluminium body. In high-volume production, aluminium and steel bodies are pre-treated separately using special techniques and later painted together using the same electrophoretic dipping process. Following this, the bodies are sealed and underbody coating applied on manufacturing lines which are divided up according to model type. The third construction stage enabled the introduction of segmentation, i.e. production is divided up into segments according to model line.



This resulted in higher flexibility in the areas of filler and finish spraying and trim line. A Tryout Centre provides a location for the hands-on training of new paint shop staff, for body painting in special colours and for testing out new painting techniques. Around 950 employees, working in three shifts, paint over 1,100 bodies a day using ultramodern techniques. The paint shop at Neckarsulm handles all bodies of the Audi A6, A6 Avant and A8 models, as well as the Lamborghini Gallardo.



The Audi Toolmaking Division

The Audi Toolmaking Division was founded in June 1993. This division functions as an independent company under the umbrella of AUDI AG. Toolmaking is assigned to the Production Division and is headquartered in Ingolstadt. The Toolmaking Division at the Neckarsulm site has three segments: plant and equipment construction, toolmaking and machine technology. In total, the Toolmaking Division at the Neckarsulm site employs some 350 people. It covers an area of 15,000 square metres and produces forming tools, body manufacturing equipment, appliances, pre-series pressed parts, mock-ups and cubes. The Tryout Centre, inaugurated in September 1998, was one of the largest investments in toolmaking at the Neckarsulm site, totalling EUR 13 million. In 2005, a new testing press with a table size of 5 x 2.5 metres was bought for EUR 1.8 million. Seven presses are currently in use, some of them using pressures of up to 2,100 tonnes. The Audi Toolmaking Division is regarded as the world leader in the automotive industry for several processes, including aluminium forming.



In the 2004 Excellence in Production contest for “Toolmaker of the Year 2004”, the Audi Toolmaking Division was the overall winner among the participating 220 German toolmaking and mould construction businesses. Apart from its own brand group comprising Audi, SEAT and Lamborghini, its customers include VW, _koda, Bentley and external carmakers.



Technical Development

1,030 people are employed in Technical Development at Neckarsulm. Besides the Aluminium and Lightweight Design Centre, the main areas of activity at the Neckarsulm site include the development of petrol and diesel engines, sports engines for motor racing and interior equipment and trim.



Aluminium and Lightweight Design Centre

In 2004, Audi celebrated the tenth anniversary of the Aluminium and Lightweight Design Centre at Neckarsulm. The production plant at which the Audi A8 luxury saloon with its aluminium body is built is also where the Group’s aluminium expertise is focused: in 1994, Audi invested around EUR 8 million in building the Aluminium Centre in Neckarsulm. Here, Audi has concentrated its experience in lightweight design, bringing together the know-how of the Development, Production Planning and Quality Assurance departments under one roof.



Three years ago Audi renamed the centre “Aluminium and Lightweight Design Centre Neckarsulm”. The name reflects the fact that research and development have long since shifted their focus beyond aluminium alone. High-strength steels, tailored blanks, fibre-reinforced plastics and magnesium are increasingly used at Audi. The systematic implementation of lightweight design in body manufacturing is helping to achieve a noticeable reduction in fuel consumption. The engineers at the Aluminium and Lightweight Design Centre have developed vehicles such as the A2 and the A8. The Lamborghini Gallardo has its roots here too. Audi’s affirmation of the aluminium body has also had an impact on the steel industry: in response to the development of the first volume-produced aluminium body for the Audi A8, steel manufacturers stepped up their efforts to develop high-strength and ultra-high-strength steels for body manufacturing.



The year that the Aluminium Centre (as it was then known) was established was also the year in which the first A8 left the production line – the first production vehicle to feature the Audi Space Frame concept (ASF). The first high-volume car with this technology followed in 1999 in the guise of the Audi A2, of which more than 176,000 were built in Neckarsulm. 2002 saw the creation of the second-generation Audi A8 at the Aluminium and Lightweight Design Centre, followed by development of the body for the Lamborghini Gallardo super sports car at Neckarsulm one year later.



During this period, Audi also developed new production technologies. Automation in body manufacturing has now reached a level of 80 percent, which corresponds to the degree of automation in the production of a steel body. The volume production of aluminium bodies at Neckarsulm is acclaimed industry-wide: the Neckarsulm workforce has already built around 350,000 vehicles with an aluminium body.



There are currently 110 employees at the Aluminium and Lightweight Design Centre, working on the refinement of Audi’s lightweight design expertise. They are essential in securing the company’s lead in lightweight design, both in development and production.



Engine development at Neckarsulm

In 1975, Audi embarked on the development of the direct-injection diesel engine (TDI) at Neckarsulm for the Group as a whole. Going against the common trend, they started tackling the most ambitious challenge – developing a small, fast-running TDI diesel engine for passenger cars. This long and difficult process was successfully completed in 1989 when the world’s first TDI engine was launched in volume production. This first 2.5-litre five-cylinder engine developed 88 kW and 265 Nm. Its principal features were the Audi combustion method with two-valve technology and inlet swirl duct, an exhaust-gas turbocharger with intercooling and an electronically controlled distributor-type fuel-injection pump.



The TDI was a success right from the start. In terms of fuel consumption and performance, this new technology proved far superior to direct competitors. The TDI is an example of “Vorsprung durch Technik” – a milestone in the same way as quattro, the Audi Space Frame or FSI technology on petrol engines. Around 50 percent of Audi vehicles are now equipped with TDI engines. Audi’s expertise in diesel engine development is concentrated at its Neckarsulm plant. 171 staff in Technical Development are employed in the area of diesel engine development, supplying all V-type diesel engines for Audi as well as for other companies in the VW Group. Top engines like the 4.2-litre V8 TDI with 240 kW and 650 Nm of torque are now to be found in luxury saloons such as the Audi A8. Innovations such as common rail technology with piezo inline injectors feature in all Audi 6- and 8-cylinder TDI engines. The new generation of Audi V-type diesel engines also features a modern diesel particulate filter. Fuel cell engines are another area of activity for the engineers at Neckarsulm.



The design of the 8-cylinder unit for the Audi V8 in 1984 ushered in the development of high-performance petrol engines at Neckarsulm. The V8 marked Audi’s entry into the luxury car class. It was followed by the development of the 8-cylinder engine for the Audi A8 and later the Audi A6. Since 1997, 12-cylinder engines have also been developed in Neckarsulm, in cooperation with the parent company Volkswagen. This top engine was first used in the Audi A8 6.0. The 8-cylinder engines are so compact that they can even be installed in the Audi S4. quattro GmbH was delighted to be able to rely on the competence of Neckarsulm’s expert design engineers for its new RS 4 model.



For 20 years now, sports engines for motor racing have been developed in Neckarsulm. These have been used in competitions such as the TransAM, IMSA, DTM, touring car championships, ALMS and Le Mans. The approximately 30-strong team of sports engine developers has already celebrated many successes: Audi has been victorious four times in the legendary Le Mans 24 Hours alone. Audi clinched its last victory in 2005 with its fifth overall win in the American Le Mans Series (ALMS). Thanks to their expertise, the sports engine developers are also in demand within the rest of the Volkswagen Group, with customers also including _koda, SEAT and Bentley.



27 new engine test rigs for thermodynamics and engine mechanics development are to be set up together with the necessary workshops at Audi’s Neckarsulm plant by December 2006. These will be housed in a new five-storey building with a total floor area of 3,200 square metres. The building is 78 metres long, 40 metres wide and, at 28 metres, one of the highest buildings at the plant. Audi is investing a total of EUR 42 million in the new engine test centre, thus offering the 50 staff employed there a highly modern and innovative working environment.







The Audi Forum Neckarsulm

Since 1989, customers have been able to pick up their new cars directly from the Neckarsulm plant. And since June 2005, this has been possible from the Audi Forum Neckarsulm. With this magnificent building, Audi is presenting a new dimension of its corporate presence at Neckarsulm – and the Heilbronn-Franconia region has acquired a new visitor attraction. The Forum, with its outstanding architecture, is the last of three construction stages to revamp the southern section of the site.



In these innovative surroundings, collecting a new car provides the customer with a very special experience. The Forum presents the current and latest models in the Audi range as well as the development of the brand. In the Audi exclusive studio, quattro GmbH advises customers personally about possibilities for customising their Audi. Customers and visitors are likewise invited to enjoy the Audi restaurant or browse the Audi Shop for lifestyle articles from the vast range of Audi design accessories. New car customers and visitor groups who have booked in advance are offered tours of the plant. The Audi Forum also provides a fitting venue for conferences, events or festive occasions.



More than 100 employees working at the Audi Forum help to make this visit as pleasant as possible for customers and visitors. The design orientation of the Audi brand is reflected in the architecture of the building: a sheet aluminium facade covering an area of 1,370 square metres represents Audi’s leading role in the field of lightweight design technology. The focal point of the Forum is the ellipse which covers a base area of some 640 square metres. Forming an open 18-metre-high hall, the ellipse culminates in a glass dome. Symbolising openness, the ellipse is one of the main attractions and the pulsating hub of the Forum. The 3,325 square metres of glass-and-steel facade provide the building’s outer shell and ensure transparency.







quattro GmbH

quattro GmbH, based in Neckarsulm, has the task of emotionalising the Audi brand in the areas of individuality, exclusivity and sportiness. This fully owned subsidiary of AUDI AG, which was established in October 1983, was initially responsible exclusively for selling high-quality lifestyle accessories. Following restructuring in 1998, quattro GmbH now has four business areas – RS, S line, Audi exclusive, and Audi design accessories – offering a wide range of products that are marketed worldwide. The areas of administration, development and production are based in Neckarsulm, while the sales and marketing departments are located in Ingolstadt.



The RS 6 went out of production in October 2004. The international sales success and positive market resonance of the RS models have endorsed the RS strategy and the sporty positioning of the Audi brand. In less than two years, 8,126 of the RS 6 were built and supplied all over the world.



Production of the completely newly developed RS 4 started in the summer of 2005 at quattro GmbH in Neckarsulm. With the second generation of the RS 4, based on the current A4, quattro GmbH is continuing its tradition of bridging the gap between everyday motoring and motorsport with high-performance vehicles. The sports car for all 365 days of the year combines new dimensions in driving dynamics with innovative ideas, exciting styling and a level of equipment living up to luxury-class standards. The 420 bhp eight-cylinder power plant is Audi’s first high-revving engine. Not only that, but it is also equipped with the same innovative FSI technology that took Audi to all its five Le Mans victories, impressively demonstrating its high performance in the process.



Environmental protection in Neckarsulm

As a globally active company, it is the goal of AUDI AG to assure mobility for the individual. In this role, the Group holds responsibility for continually improving the environmental compatibility of its products and manufacturing sites as well as for the environmentally friendly use of natural resources. For this purpose, progressive technologies are applied where possible, but only after careful consideration of both ecological and economic aspects.



AUDI AG makes these technologies internationally available, enabling their use throughout the whole process chain.



In September 2004, the Audi Neckarsulm plant passed the voluntary environmental certification according to the European Union’s Eco-Management and Audit Scheme for the fourth consecutive time. An independent environmental audit firm checked manufacturing processes at the site, as well as peripheral activities such as the heating plant, the wastewater treatment plant and the waste material unit.



However, the Audi Neckarsulm plant has achieved more than just these environmental goals. Its main activities include improving soil and water protection, ongoing measures to reduce and limit noise emissions and optimising the wastewater treatment facility. For nine years, the site has succeeded in continuously improving environmental protection. In October 1995, Audi Neckarsulm became the first German car plant in the premium segment to achieve environmental certification.



Since 1995, the paint shop has used water-based filler and primer paints and low-solvent two-component clear coatings, enabling it to approximately halve solvent emissions. The paint shop moreover no longer discharges any wastewater from the production process into the sewerage system. Heat recovery technology helps to reduce energy consumption and emissions.



Metal waste generated by cutting steel sheets in the press shop is fully recycled. It is compressed in packing presses and returned to the steel mills for recycling.



Audi relies on innovative materials and technologies to make the car’s useful life as ecologically friendly as possible even once it has left the plant. Lightweight design using materials such as aluminium, magnesium and plastics has significantly reduced vehicle weight, also reducing fuel consumption and emissions. This is particularly true for the lightweight models with ASF body, but also for the Audi models of composite design.



In 2005, Audi put a new chemical/physical wastewater treatment facility into operation. Audi invested EUR 3.7 million in this new facility, which helps to reduce water consumption and the content of heavy metals in the wastewater significantly. This new facility was presented to participants at the 12th Environmental Conference, to which Audi has been inviting partners in the region for several years.



Training at Audi

Audi considers training an investment in the future. The Audi training drive provides young people embarking on their first job with the best career opportunities, even in times of high youth unemployment and unfavourable general economic conditions. Learning stations integrated into the production area allow apprentices to benefit from hands-on training. Almost 40 learning stations are distributed between the Technical Development, Production and Quality Assurance areas at the plant. One learning station supervisor is responsible for an average of six apprentices, using work samples to familiarise them with productive and systematic working processes. Tests and exams are also conducted at the learning stations. Variable training hours allow the optimum integration of training into production processes and maximum use of the facilities available.



Interdisciplinary training also plays an important part. Examples include team training, health activities, sports days, drug prevention, driver and safety training, and project weeks for apprentices. In the nationwide “Jugend forscht” (Young Researchers) competition, two teams from the Neckarsulm Training Department were winners at regional level.



In September 2005, 229 apprentices and 15 “Berufsakademie” (University of Cooperative Education) students started their training at Audi Neckarsulm. At the end of 2005, there were 797 apprentices in all training years at Audi in Neckarsulm, including 729 industrial and 68 commercial/technical apprentices. Training was offered in a total of 13 vocations in 2005. The most popular apprenticeships offered are automotive and general mechatronics. Apprentices are appointed on the basis of their school leaving certificate, a job aptitude test and, in the case of commercial apprentices, an assessment centre. It is also advantageous if applicants have previously completed a placement at Audi while still at school. An average of 600 school pupils complete a one-week placement at Audi every year.



Audi is to adopt flexible arrangements for career starters in future. After their initial training, young Audi employees will have the chance to travel further afield and be assigned to other companies – suppliers or dealers, for instance. The young employees can also broaden their horizons at other Group companies in Germany or abroad.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









quattro GmbH



Sports appeal, individuality and exclusivity

quattro GmbH has been representing a very special lifestyle to complement cars that sport the four-ring badge since October 1983. This fully-owned subsidiary of AUDI AG offers friends and followers of the Audi brand an extensive range of high-tech products, customisation options and lifestyle articles. It adds a note of sports appeal, individuality and exclusivity to the technically advanced products for which Audi is renowned. quattro GmbH supports Audi through its sporty and individual products. Its aim is to satisfy exceptionally challenging requirements to an exceptionally high degree.



One of its most famous brand names made its debut in 1980: the Audi quattro. This high-performance coupé took not only the world of rally competition by storm with its form of permanent four-wheel drive and, in doing so, added considerable weight to the Audi brand claim “Vorsprung durch Technik”. The impressive quality of the new drive technology soon elevated the term “quattro” to the status of much more than a technical designation: quattro evolved into the brand name for out-and-out quality from a premium manufacturer.



In 1983, quattro GmbH, as a fully-owned subsidiary of AUDI AG, became synonymous with an entirely independent product range. With its many years of experience, quattro GmbH is now able to satisfy customer preferences for even greater individuality under the new label of “Audi exclusive”. Its range of equipment items extends from exclusive paint finishes, fine leather and stylish woods to sporty wheels and modern communication technology. The “S line sports packages” that quattro GmbH offers for virtually all Audi car lines enhance their sports appeal. The range is completed by the extensive selection of lifestyle articles in the “Audi design lifestyle articles” range. quattro GmbH has in addition developed three quite exceptional high-performance vehicles in the Audi RS 4 (1st and 2nd generation) and RS 6.



quattro GmbH currently has 418 employees, 164 of whom work in production and logistics. Its administration, development and production activities are based in Neckarsulm; the sales and marketing operations are controlled from Ingolstadt. The company generated revenue of around EUR 290 million in the 2005 financial year.



Audi RS 6: high performance with personality

The launch of the Audi RS 6 in June 2002, following on from the RS 2 and RS 4, represented the next logical step for the Audi brand’s unprecedentedly successful activities in the segment of high-performance vehicles. The original plan was to build around 6,000 of the RS 6, but “demand far exceeded even our most optimistic expectations”, remarks Werner Frowein, Managing Director of quattro GmbH. By the time production ceased in October 2004, a total of 8,081 of the brand’s most powerful model ever had been built.



The RS 6 was a joint development by quattro GmbH and AUDI AG. Both saloon and Avant versions were built jointly by the Audi plant and quattro GmbH at Neckarsulm. A workforce of some 120 turned out an average of 30 of these cars each day. Final assembly and finishing of the RS 6 took place in quattro GmbH’s production halls in Neckarsulm.



quattro GmbH extended its range in 2004 by offering a sports version, the Audi RS 6 plus, limited to a maximum of 999 vehicles. With an output of 353 kW (480 bhp), the RS 6 plus developed 30 bhp more than the standard Audi RS 6 and accelerated from 0 to 100 km/h in just 4.6 seconds.



The Audi RS 4: The sports car for 365 days a year

Leading through passion: numerous technical innovations – many of which hail from motorsport – give the new Audi RS 4 its individual character. These features include the high-revving concept, now being introduced for the first time in a production Audi, innovative FSI technology, as well as the latest generation of quattro drive with aymmetric/dynamic torque split. The 420 bhp V8 revs up to a speed of 8,250 rpm.



quattro GmbH launched this new top model as a saloon in December 2005. The Avant will follow in mid-2006. Compared with the previous model, the RS 4 is a completely new development. New dimensions in driving dynamics combined with innovative ideas – plus exciting styling and a level of equipment that lives up to even luxury-class standards: the new Audi RS 4 combines the latest high-performance product from quattro GmbH in a thoroughbred sports saloon with supreme everyday driving qualities in the premium segment.



Audi has chosen to focus on pioneering FSI technology for the RS 4. The petrol direct-injection unit delivers enhanced power output based on more efficient combustion of the fuel/air mixture. The engine is also more responsive. The performance of the RS 4 clearly demonstrates this progress: it reaches the 100 km/h mark in 4.8 seconds, and 200 km/h in 16.6 seconds. Top speed is limited electron-ically to 250 km/h. The efficiency of FSI technology has already been demonstrated impressively in Audi’s four-time Le Mans winner, the Audi R8.



Another key requirement for the developers of the RS 4 was an optimum power-to-weight ratio. It was important that the Audi RS 4 should weigh not a gram too much. The expertise of the Aluminium and Lightweight Design Centre in Neckarsulm, for example, helped to achieve this goal. The front wings and the bonnet are made of aluminium, as are most of the chas-sis components. The result is a power-to-weight ratio of just 3.93 kilos per bhp – a figure truly reminiscent of a thoroughbred sports car which would not even have been conceiv-able for a midsize saloon just a few years ago.



Like the previous model, the new RS 4 is built in conjunction with the production of the A4 at the company’s head office in Ingolstadt. The partly finished cars are then transported by truck to Neckarsulm where they are finished on the RS production line. Each RS 4 passes through the plant’s test centre, is then tested painstakingly on internal lines and external roads and, to conclude, is given final approval at quattro GmbH. The average daily production figure is 40 cars.



Green light for the Audi R8

The new Audi sports car, presented at the IAA back in 2003 as the “Le Mans quattro” concept study, will go into production at the Audi Neckarsulm plant in 2006. Its name: R8. The Audi subsidiary quattro GmbH is responsible for the development and production of this new model. 28 million euros are currently being invested in the R8 production line. This follows conversion and renovation work in an existing production hall on the plant site. 250 employees will ultimately work on the production of the R8. “Through the R8 we are looking to build on our successes in motorsport and carry them over to series production. This model stands for sportiness and intelligent lightweight design,” explains Werner Frowein, Managing Director of quattro GmbH. The body is being developed together with the Aluminium and Lightweight Design Centre in Neckarsulm.







From series product to unique specimen: Audi exclusive

Personality calls for individual expression, for tailor-made concepts in response to particular needs. The “Audi exclusive” customisation programme gives the vehicle a character all of its own. quattro GmbH enables the customer to have their vehicle customised to reflect their personal preferences and tastes precisely. They can choose from pre-configured packages – Audi exclusive line – or from the extensive Audi exclusive customisation programme.



quattro GmbH offers an extensive range of options for customising a car’s interior. Customers can choose from 12 different leather colours, available in the two leather grades Valcona and Fine Nappa, plus Alcantara in nine colour versions. All leather packages moreover come with a free choice of the colour of the stitching. To match the leather, the inlays on the instrument panel, centre console and doors can be given an individual touch with fine-wood appointments. Every wood is sanded by hand, then stained, varnished and polished – a process almost as intricate as crafting a violin.



Exclusive carpets in nine colours guarantee comfort and style under foot too. High-grade floor mats in ten customised colours or the standard carpet colours, with leather borders in the desired colour, are also available.



Special paint finishes for the body can be ordered in practically any colour requested, provided the paint can be produced on a water-soluble basis to ensure its environmental compatibility. Customised paint finishes, tinted windows and a “black” styling package can also be ordered for the exterior.



The office packages for the Audi A8 round off the customisation programme. Sophisticated infotainment and telecommunication concepts such as Rear Seat Entertainment or the MFCU communication unit with integral fax, telephone and Internet connection both keep the mobile office in touch with the outside world and make it a place of relaxation. The Audi exclusive cool box and the folding table housed in the back of the front passenger’s seat provide an extra note of luxury for rear passengers.



In conjunction with the customised body colours, the Audi exclusive range of alloy wheels provides an extra touch of individuality for car’s external appearance. Derived from the RS models, the range extends from the cast aluminium wheel with a linear 9-spoke design to the cast aluminium wheel with an intricate 20-spoke design.



quattro GmbH customises around 25 vehicles a day in accordance with the highest quality standards. After internal quality checks and function tests, vehicles return to the volume-production line for the final inspection.







S line embodies sports appeal and emotions

In the hierarchy of the Audi sports world, the independent RS models from quattro GmbH are positioned as high-performance vehicles in the noble sports car segment. The current S models, on the other hand, are at the sporty vanguard of their respective car lines. The S models enhance their potential to fascinate and their emotional appeal through their distinctive sporting properties. Thanks to characteristics such as particularly powerful engines, quattro permanent four-wheel drive and sporty interiors, they provide an undiluted driving experience.



Between the S models and the corresponding Audi car lines that are positioned beneath them, the S line packages from quattro GmbH provide a gateway to the Audi world of sport via their visible but still restrained level of differentiation. The S line packages are available in various versions for the current Audi A3, A4, A6 and TT models, and will also be offered for the new Audi Q7 from mid-2006. The S line badges on the vehicle serve as a subtle differentiating feature.



The S line sports package plus features S line sports suspension with firmer spring/shock absorber settings and a colour range extended to include two exclusive colours.. Sports seats with the side sections in black leather, the centre section in an attractive cloth/leather combination and an embossed S line logo, a driver information system, black headlining and matt brushed aluminium inlays underscore the car’s sporty looks inside.



As the S line sports package plus is tailored to the specific design of each model, the packages for each model include further model-specific items, such as S line door sill trims or an exclusive range of wheels.



Customers can also order S line exterior packages which enhance the sporty looks of the Audi A3, Audi A4, Audi A6, Audi TT and, from mid-2006, the Audi Q7 even further. These packages include items such as modified front and rear bumpers, S line logos and a rear or roof spoiler. The S line packages can be combined with each other, providing the customer with custom sports appeal.



Audi design lifestyle articles: a touch of individuality for individualists

There is increasing demand among Audi customers for greater individuality. To them, Audi lifestyle articles represent a special outlook on life that goes beyond the extensive Audi model range. The range of Audi lifestyle articles is divided into four collections aimed at different target groups: Audi design, Audi collection, Audi tradition and Audi miniatures. The products sold by quattro GmbH are designed and developed in close partnership with the Audi Product Design Team at the Concept Design Studio in Munich.







Audi design

Audi design collection – this comprises sophisticated, distinctive products that reflect Audi’s design standards to a particular degree in this small but thoroughly exclusive collection, thanks to the stylish use of materials and finishes, attention to detail, technically accomplished execution and interpretation of shapes and surfaces in typical Audi style. Take for instance the Audi design Square chronograph, the outcome of a partnership with Sinn Spezialuhren GmbH. Patented by Audi, the adjusting mechanism in the watch casing, which is used to adjust the wrist strap, is a special feature. Sophisticated high-tech products include the Audi design mountain bikes, available in three versions and winners of multiple design awards. quattro GmbH worked closely together with the Aluminium and Lightweight Design Centre in Neckarsulm on the development and realisation of the pioneering frame design. The frame and seat tower, for example, are unique in-house developments. The star in the premium range of Audi bikes is the Audi Design Pro RS.



Audi tradition

The Audi tradition collection looks back over the illustrious history of the Audi brand. As well as exclusive leather goods made from distinctive leather tanned using plant-based tanning agents, sophisticated textiles and selected collector’s items, this range brings together a number of memorabilia that evoke the history of Audi. Famous product names such as DKW, Horch, Wanderer and NSU point to those brands in which Auto Union and then AUDI AG had their historical roots.



Audi collection

The products in the Audi collection form the basis for the serious Audi enthusiast’s fashion accessories. The watches, key rings and sunglasses are of a modern design. Luggage, small leather goods and items of clothing such as T-shirts, jackets, scarves and baseball caps are sporty and leisure-oriented.



Audi miniatures

The Audi range of model cars includes historic, racing and production vehicles on all classic scales and in a wide range colours. Their authentic appeal is vividly evoked – whether as desktop ornaments or in the showcase of the out-and-out collector.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |









The Lamborghini Group



Year of establishment: 1963



Ownership: Fully owned subsidiary of AUDI AG since 1998



Companies: The companies Automobili Lamborghini S.p.A. (sports cars), Motori Marini Lamborghini S.p.A. (boat engines), Lamborghini ArtiMarca S.p.A. (licences and merchandising), AUTOGERMA S.p.A. (Italian general importer for the Audi, Seat, _koda, Volkswagen and Volkswagen Commercial Vehicle brands) operate under the umbrella of Automobili Lamborghini Holding S.p.A.



Sales revenues (2005): EUR 243 million (excluding AUTOGERMA)



Sports cars sales (2005): 1600 units



Employees (annual average 2005): 700 (excluding AUTOGERMA)



The 2005 business year

Automobili Lamborghini celebrated its fortieth anniversary in 2003. The sports car manufacturer founded in 1963 by Ferruccio Lamborghini, with its head office in Sant’Agata Bolognese, ended its anniversary year with record sales. In 2005, Automobili Lamborghini S.p.A. sold 1600 sports cars (2004: 1592), thus setting a new sales record. Its revenue was EUR 243 million (as in 2004). The company had an average of 700 employees in 2005, including 125 people engaged in research and development activities. The biggest markets for Lamborghini sports cars are the USA (40 %), Germany (10 %), Italy and Japan (8 %) and Great Britain (5%).



The plant

• Sant’Agata Bolognese (BO), Italy

• Area: 100,000 m2

• Employees:700 in the annual average for 2005 (around 125 in Development)

• Production of: Murciélago, Gallardo, Murcièlago Roadster, Gallardo Spyder, engines and gearboxes

• Production in 2005: 1600 vehicles

• Manhours per unit: approx. 500 hours

• An investment programme of around EUR 150 million includes the development of the Murciélago , Gallardo, and Murcièlago Roadster the upgrading of the production facilities, a new development centre, a museum with showroom and a new office building







The Lamborghini Murciélago

True to the tradition of this world-famous company with the bull as its brand emblem (company founder Ferruccio Lamborghini was born under this sign of the zodiac), Lamborghini has again given the latest product in its distinguished product family the name of a bull. After a series of names taken from types of bull and terms borrowed from bull-fighting – Miura, Islero, Urraco, Jalpa and Espada – the new product has been named Murciélago. This is an unusual but appropriate name for the latest no-compromise sports car from the Lamborghini company.



The Lamborghini Murciélago is a two-seat sports coupé with two doors that, in the Lamborghini tradition, are pivoted at the front and swing upwards. The complete concept of this new model is typical of Lamborghini, with V12 mid-engine, the transmission mounted ahead of the engine, the differential behind it integrated into the engine block and permanent all-wheel drive with a central viscous coupling.



The Murciélago is powered by a 6,192 cc V12 engine. This has an all-aluminium block and is capable of complying without difficulty with even severe exhaust emission limits (EU3 in Europe, EPA, CARP and TIER1 in the USA, JAP in Japan). Its power output is 580 bhp (426 kW) at 7500/min and its maximum torque 650 Nm at 5400/min. This engine accelerates the Murciélago supersport model from 0 to 100 km/h in approx. 3.8 seconds and gives it a top speed of more than 330 km/h.



The new Murciélago’s body is based on a high-strength steel lattice-tube framework, with a high proportion of honeycomb-structure load-bearing elements reinforced with carbon fibre. The sheet steel and carbon-fibre elements are bonded together or joined with steel rivets. The frame, with the load-bearing sheet-steel roof and carbon-fibre reinforced floor panel, has additional reinforcement in the form of ribbed steel sheets; these also have a load-bearing function.



The Lamborghini Murciélago Roadster

The Roadster is a continuation of the Italian tradition of open cars, particularly the cars that have made the Lamborghini name what it is today.



Confirming and strengthening the extreme, exclusive character of the Murciélago Coupé, the Roadster is the “icon” of the new Lamborghini era.



The design of the Murciélago Roadster is exclusive, aggressive and extreme. Whilst designing the Roadster, Luc Donckerwolke – the head of the Centro Stile at Lamborghini – did not settle for simply “cutting” the roof off the Coupé, but gave the open car an original look and a special feeling, a styling of its own, making the Murciélago Roadster absolutely unique.



The Murciélago Roadster was recently voted as the world’s most beautiful supercar as part of the „The World’s most Beautiful Automobile 2004“ awards. The decision was taken by an international jury comprising designers, car and art historians, and specialist journalists.



Based on the technology of the Murciélago Coupé, the Roadster version differs in several key features, such as new parts of the frame, in steel and carbon fibre, designed for additional torsional and flexural rigidity. Incorporated into the overall design philosophy, one of these features, the engine frame, is offered as an option in visible carbon fibre.



Without altering the extreme nature of the car, a soft top can be fitted. It is designed – as is the tradition for this type of vehicle – solely for temporary use (for example a sudden shower) and for speeds of up to 160 km/h (100 mph).



Special attention was nevertheless paid to safety. The Murciélago Roadster is fitted with a special automatic, electronic roll bar which is activated in a few milliseconds from the housing behind the seats in the event of an emergency (roll-over).



The dimensions are the same as for the Coupé. Only the height is different: the Murciélago Roadster is nearly 70 mm lower.



The engine is what a Lamborghini is all about: a 12 cylinder V60° of 6192 cc producing 580 HP (426KW) at 7500 rpm and maximum torque of 650 Nm at 5400 rpm with L.I.E. Lamborghini electronic control. The gearbox is the same as in the Coupé: a manual 6-speed. A robotized 6-speed e-gear system is also available as an option.



The Roadster, like all Lamborghinis, is equipped with permanent 4-wheel drive.



The top speed of the Murciélago Roadster, depending on aerodynamic configuration, is over 320 km/h (around 200 mph).



The Murciélago Roadster is the most extreme and exclusive product line. The interior has so-called asymmetrical open-worked leather upholstery (left-right split). The driver’s area is a genuine “Pilot-Oriented Challenger“.



The Lamborghini Gallardo

For the first time in over a decade the Italian sports car manufacturer Lamborghini has a second model line in the programme for 2003. The new Lamborghini model with the name Gallardo (pronounced ga:jàrdo) will be presented in March next year at the Geneva Motor Show.



The new Lamborghini owes its name to a famous race of fighting bull that was reared from the 18th century onwards by Francisco Gallardo and later by Don Antonio Miura.



The new Lamborghini Gallardo is fully in keeping with the Lamborghini tradition as a sports car with a mid engine and four-wheel drive. The car is driven by a completely new Lamborghini V10 engine with a displacement of five litres and producing an impressive 500 horsepower – figures that guarantee an exceptional performance.



The transfer of power takes place via a 6-speed gearbox with traditional gearshift lever or via the new sequential “e-gear” with shift paddles at the steering wheel.



Production of the new Lamborghini V10 engine has already begun on the newly built assembly line in Lamborghini’s own engine manufacturing plant at Sant’Agata Bolognese.



Both the new Lamborghini Gallardo and the Spyder version feature the 90° V-engine that is familiar from the Gallardo SE. Since the 2006 model year, the ten-cylinder engine has had a maximum power output of 520 bhp (382 kW) at 8,000 rpm from a displacement of 4,961 cm_. Developing over 100 bhp per litre of displacement, its specific output is of motor racing standards. Thanks to the use of aluminium for the engine block and cylinder head, it weighs an astonishingly light 250 kg.



With this basis, the Gallardo achieves a top speed of 315 km/h. It sprints from 0 to 100 km/h in a sizzling 4.0 s.



The ten-cylinder power unit achieves its peak torque of 510 Newton-metres at 5,500 rpm, and actually achieves 80 % of this peak figure at a mere 1,500 rpm. Its stroke is 92.8 millimetres and its bore 82.5 millimetres. The cylinder liners are made from a eutectic alloy. The cylinder heads have four valves per cylinder. They are controlled by two chain-drive overhead camshafts on each bank of cylinders. The ignition system features spark plugs with integral ignition coil.



To maintain an ample torque characteristic across the entire engine-speed range, the charge cycle is controlled by an intake manifold with modified geometry and continuously variable valve timing (at both the intake and exhaust ends). The variable geometry maintains an optimum fundamental characteristic in the gas dynamics at both low engine speeds (long intake path) and high engine speeds (short intake path). The variable valve control guarantees that the valves open and close at the optimum moment across the entire speed range. For instance, the intake valve closes sooner at low engine speeds and later at higher engine speeds in order to exploit the positive pressure pulse peaks at the intake valves.



Throttle control consists of a drive-by-wire system with two electronically controlled throttle valves. The exhaust system consists of two separate blocks with two “5 in 1” exhaust manifolds with by-pass system, to reduce the exhaust back pressure from 4,000 rpm. The result is an improvement in the performance figures and an extremely sporty engine sound. The Lamborghini Gallardo of course meets the stringent EURO 4 emission standards.



Driveline

To assure optimum traction in all circumstances, its engineers gave the Lamborghini Gallardo permanent four-wheel drive. It is based on Lamborghini’s proven VT (Viscous Traction) system. This system regulates itself without the need for electronic control. The propulsive power is normally split 30:70 between the front and rear wheels. An automatic control circuit adapts the distribution of propulsive power in line with dynamic fluctuations, the weight distributions and the momentary coefficients of friction, on the basis of the selected characteristic of the viscous coupling. In the extreme, up to 100 percent of the propulsive power can thus be diverted to one set of wheels.



The Lamborghini Gallardo Coupé, like the Spyder and Gallardo SE, enjoys the advantages of a new six-speed gearbox with shorter ratios. In specific, 1st gear is 27 % shorter than on the original version, 2nd gear 13 % shorter, 3rd, 4th and 5th gears 6 % shorter and 6th gear 3.5 % shorter. This consequently made it possible to improve still further on its blistering acceleration.

By way of an optional extra, the Lamborghini Gallardo can be equipped with e-gear, an electronically controlled sequential gearshift system. This permits virtually jolt-free gearshifts at a speed that even an experienced driver would be unable to achieve. Depending on the operating mode selected, gearshifts take between 200 and 600 milliseconds.



There is an extensive range of extras available for the 2006 Gallardo, ranging from a rearview camera and a luggage set to sports suspension. Then there is the Privilegio customisation range that appeared at the end of 2005. This gives the customer the option of tailoring the interior in particular to their specific tastes and preferences.







Lamborghini Gallardo Spyder

Design




As with every Lamborghini, the design of the Gallardo Spyder adheres to the stylistic principles of purity, sportiness and clarity.

The designers at the Centro Stile Lamborghini have created an athletic body with the ideal dimensions of a sports car. Even at a standstill, the 4.30 m long, 1.90 m wide and almost 1.19 m high mid-engined sports car signals extreme performance. It is clear how the formal idiom has been inspired by modern aircraft construction. Edges and straight surfaces characterise its compact appearance.



The nose is characterised by the two striking air inlets and the large trapezoidal light units that accommodate efficient bi-xenon headlights. As on the Gallardo Coupé, the forward-positioned cockpit with its highly raked windscreen determines the dynamic silhouette. Echoes of the Coupé: the harmoniously flowing roof line of the hood when in the raised position. The tail end’s short overhang likewise looks imposing. The overriding principle behind the design was to evoke an authentic Spyder experience. The designers achieved this above all by avoiding the use of visible rollover bars. Instead, the open-top Gallardo has a rollover protection device that is automatically extended in the event of an emergency, as well as a fully retractable rear window; neither of these two features interrupts the purist lines of the vehicle.



The designers and engineers constantly exchanged ideas and information throughout the development phase of the new Lamborghini Gallardo Spyder. It is thanks to this thorough integration of the design process into the technical development process that the Gallardo Spyder has acquired stylistic elements that always perform a specific function. At the same time, every technical function is also interpreted with an eye to aesthetics.



One impressive example is that the body has the shape of an inverted wing. It assures an optimum aerodynamic flow that on the one hand supplies ample intake air to the centrally installed ten-cylinder engine. On the other hand its shape provides negative lift at the rear wheels. This negative lift is reinforced by an electronically controlled rear spoiler that is extended at 120 km/h and retracted again at 90 km/h. All these measures result in exceptionally neutral handling.



The hood

The Lamborghini Gallardo Spyder has a fully automatic hood. This makes it especially straightforward and quick to operate. The soft top is opened and closed via two specific switches on the centre console. The opening and closing processes each take around 20 seconds. At launch, the soft top is available in black, but blue, grey and beige colour versions will be added over the next few months.



The fully automatic hood mechanism of the Lamborghini Gallardo Spyder consists of the following elements:

- An electronic control that is integrated into the vehicle’s CAN-BUS network and governs the roof’s

movement

- An electric pump

- The soft top

- The carbon fibre front lid that doubles up as the soft top’s cover

- Six hydraulic cylinders (four to operate the soft top and two to operate the front lid)

- Two electric control elements (one to engage the catch at the front of the roof frame, and one to

release the front lid catch)

- An electric motor, to raise and lower the rear window



A service function makes it possible to position the roof such that the engine is accessible.

The rear window moves up or down and is automatically operated by the electronic control unit when the roof is opened or closed. When this automatically controlled movement is completed, the rear window is always extended, thus acting as a wind deflector. The driver can also retract the rear window by pressing the corresponding button on the instrument panel, even when the hood is raised.



Engine

The new Lamborghini Gallardo Spyder shares the same 90° V-engine as the 2006 Lamborghini Gallardo and Lamborghini Gallardo SE. The ten-cylinder engine develops a maximum power output of 520 bhp (382 kW) at 8,000 rpm from a displacement of 4,961 cm_.



The Gallardo Spyder is thus capable of a top speed of 314 km/h with its hood up, and 307 km/h with the roof open. It sprints from 0 to 100 km/h in a sizzling 4.3 s.



Driveline

The Lamborghini Gallardo Spyder, like the Gallardo and Gallardo SE Coupés, enjoys the advantages of a new six-speed gearbox with shorter ratios. In specific, 1st gear is 27 % shorter than on the original version, 2nd gear 13 % shorter, 3rd, 4th and 5th gears 6 % shorter and 6th gear 3.5 % shorter. This consequently made it possible to improve still further on its blistering acceleration.

By way of an optional extra, the Lamborghini Gallardo Spyder too can be equipped with e-gear, an electronically controlled sequential gearshift system.



Space frame and body

The body is notable for an optimum balance between weight and rigidity. Thanks to crash tests carried out during development, it achieves an outstanding degree of energy absorption in accident situations. It thus achieves an excellent torsional rigidity of more than 15,000 Nm/degree. To satisfy the particularly exacting requirements that apply in the case of an open-top car, the space frame of the Spyder version was reinforced around the sills and the A-posts. The front lid is made from a light, extremely torsionally rigid carbon fibre composite material.



Thanks to the lower weight of the space frame and aluminium body, an overall dry weight of just 1,570 km has been achieved. 42 percent of the Gallardo Spyder’s weight rests on the front wheels, and 58 percent on the rear wheels.



Passive safety

The Lamborghini Gallardo Spyder exceeds all European and North American safety standards. Just as an example, the standard-fit two-stage front airbags for the driver and front passenger, which also satisfy the forthcoming “out-of-position” requirements. Also standard: head-thorax side airbags and impact protection in the doors.



Two automatically extended rollover bars mounted behind the seats have moreover been integrated into the airbag control system. In conjunction with the reinforced A-posts, they afford reliable protection for the occupants in the event of a rollover.

A sensor measures the speed of the change in angle about the longitudinal axis. If this value reaches a defined critical point, the system opens the electromagnetic catch on the rollover bars that are preloaded by means of a spring. The bars then shoot out of their rest position in just 250 milliseconds. The seat belts are simultaneously tensioned.



Equipment

As is to be expected of a super sports car in this category, the Lamborghini Gallardo Spyder has a comprehensive range of exclusive equipment items. Standard features include driver, front passenger and side airbags, ABS, ESP, two-zone automatic air conditioning with sun sensor, central locking with remote control, bi-xenon headlights, Autolock locking that automatically locks the doors at speeds of more than 15 km/h, electric windows, automatically adjusted exterior mirrors with automatic folding-in, and leather interior upholstery and trim.



The Lamborghini Multimedia System is also supplied as standard. It includes four speakers, an extensive radio reception system, a 6-disc CD changer and two sockets for MP3 memory cards.



The Lamborghini Gallardo Spyder becomes even more exclusive with optional extras. These include the automatically controlled manual gearbox e-gear, an anti-theft alarm, electrically adjustable, heated exterior mirrors, a navigation system and an on-board computer.



A rearview camera integrated into the rear spoiler permits controlled reversing into parking spaces with centimetre precision. It is activated by selecting reverse with the gear lever or can be switched on manually. The camera’s sharp colour image appears on the LCD screen.



Self-levelling suspension for the front suspension takes the discomfort out of driving over bumpy road surfaces. A lifting system raises the level of the front suspension by 45 mm.



The Gallardo Spyder can be ordered in 14 different colours. These include colours that are exclusive to the Spyder: “Verde Pycus” and “Celeste Phoebe”. At launch, the soft top is available in black, but blue, grey and beige colour versions will be added over the next few months. The interior leather upholstery can be ordered in the colours “Blu Scylla”, “Nero Perseus” and “Marrone Janus”, the latter exclusive to the Spyder. The seams are executed either in the same colour or in one of ten contrasting colours available. As options, the interior can also be supplied in Bicolour Elegant, Bicolour Sportive, leather/Alcantara or Unicolour Sportive.



The customisation range “Privilegio” offers even greater scope for transforming a Gallardo Spyder into a personalised, distinctive sports car. The car can for instance be supplied in a body colour entirely of the owner’s choosing. For the interior, there are two leather packages that add to the scope of this sophisticated natural product. A carbon fibre package for items such as the air conditioning control panel, the gear lever console and the handbrake infuses this car with the spirit of the racetrack. There is further scope for customising the exterior with silver-coloured “Callisto” rims and titanium-coloured “Cassiopea” rims, brake callipers in yellow and silver and tinted rear windows and rear lights



Summary



Lamborghini – manufacturer of exceptional sports cars


Following several changes of ownership in the 1970s, AUDI AG of Ingolstadt acquired the entire share capital of the Italian sports car manufacturer Automobili Lamborghini S.p.A. in July 1998. The legal form of the company is approximately equivalent to a limited liability company that issues shares, such as exists in Great Britain, an American joint-stock corporation or a German public limited company (AG), like AUDI AG itself.



Shortly after the acquisition Audi restructured the company, and Automobili Lamborghini S.p.A. became Automobili Lamborghini Holding S.p.A.. Since November 1998 Automobili Lamborghini S.p.A. (sports cars), Motori Marini Lamborghini S.p.A. (powerboat engines), Lamborghini ArtiMarca S.p.A. (merchandising) and, since September 2000, AUTOGERMA S.p.A., the Italian importer for the Audi, Seat, _koda, Volkswagen and Volkswagen Commercial Vehicle brands, have existed as operating companies.



In the 2004 business year the general importer AUTOGERMA generated sales revenues of Euro 4.45 billion, employed a total of 724 people in the annual average and sold 241,299 vehicles of all Volkswagen Group brands. This Lamborghini subsidiary was established in 1951 in Italy. It has a network of over 2,000 dealers and service workshops, and a large parts store in Verona. The Chairman of the Board of Directors of AUTOGERMA is the Volkswagen Board Member Dr. Hans Dieter Pötsch.



The Automobili Lamborghini Holding company is controlled by a shareholders’ meeting made up of members of the Audi Board of Management. The Board of Directors, similar to that in British companies, consists of managing members and members who are not involved in the management. The chairman is Dr. Martin Winterkorn. The CEOs of the holding are Wolfgang Rasper and Salvatore Cieri.



In 1963 Ferruccio Lamborghini established the company Ferruccio Lamborghini Automobili in Sant’Agata Bolognese near Bologna. The company entered the sports car sector with the 350 GTV. However, the legend began with the Miura, the first mid-engined “super sports car”, which originated from a passion for the world of motorsport. It was succeeded by the no less spectacular Espada, Countach und Diablo models. The successor to the Diablo, the Murciélago, was shown to the public at the 2001 German Motor Show (the ‘IAA’) in Frankfurt, the Gallardo in 2003 (Geneva) and the Murcièlago Roadster in 2004.


TABLE OF CONTENTS

| PRESS CONFERENCE SUMMARY | WINTERKORN SPEECH PT 1 | STADLER SPEECH | WINTERKORN SPEECH PT 2 |



| GENERAL COMPANY PROFILE | LANDMARKS ’49-’05 | AUDI BRAZIL | AUDI CHINA | AUDI HUNGARIA | INGOLSTADT |



| INGOLSTADT LOGISTICS CENTER | NECKARSULM | QUATTRO GMBH | LAMBORGHINI |





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