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The financial crisis, which grew steadily worse in the course of 2008, had a significant effect on refinancing conditions on the money and capital markets. In the second half of the year in particular, the sharp rise in uncertainty despite massive governmental interventions led to a liquidity bottleneck never before experienced, along with a dramatic increase in refinancing costs.

The Volkswagen Group was able to more than hold its own in this environment thanks to the Group’s financial flexibility. The Group’s solid liquidity position and the large number of available money and capital market instruments allowed us to cover liquidity requirements even in difficult periods. This put us in the position to avoid particularly price-sensitive markets and absorb the general rise in refinancing costs. We took advantage of stable market phases in 2008 for a series of public capital market transactions. Two asset-backed securities (ABSs) were issued for Volkswagen Bank GmbH with a volume of approximately €2.2 billion from the Driver Program, along with a fixed-rate bond amounting to €700 million. We placed two ABS s for USD 2.0 billion and two European fixed-rate bonds for a total of €1.75 billion for Volkswagen Credit Inc. to refinance our financial services activities in the USA. Moreover, we raised an additional 3.4 billion Mexican pesos in the local capital market for the financial services business in Mexico.

The following overview provides information about the utilization of our money and capital market programs as of December 31, 2008:

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Programs

 

Authorized
 volume
€ billion

 

Amount utilized  on Dec. 31, 2008
€ billion

Commercial Paper

 

17.2

 

5.0

Medium Term Notes

 

54.0

 

20.7

Other capital market programs

 

8.0

 

0.3

Asset Backed Securities

 

23.9

 

18.1

We have a broad range of confirmed credit lines anchored by the as yet unused syndicated facility for the Group above and beyond our money and capital market programs. After Porsche Automobil Holding SE publicly announced the increase in its shareholding in Volkswagen AG in September 2008, some members of the syndicate providing this facility exercised their contractual right of termination. The credit line due in June 2012 thus decreased from €10.0 billion to €7.8 billion.

The cash holdings, short- and long-term credit lines, and the available money and capital market programs supplemented by the guarantees applied for from the German government’s Sonderfonds Finanzmarktstabilisierung (SoFFin – German Financial Markets Stabilization Fund) continue to give the Volkswagen Group a very high degree of financial flexibility, thereby enabling it to cover its refinancing requirements and ensuring that it remains solvent at all times.

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