AUDI GROUP FROM JANUARY TO SEPTEMBER 2020 - CORE MESSAGES

Fuel/power consumption and CO₂ emission figures can be found at the end of the quarterly report.

 

- KPI'S CONTINUE TO BE IMPACTED BY THE CORONAVIRUS PANDEMIC DESPITE A PLEASING THIRD QUARTER

- Key performance indicators back at or above the prior-year level thanks to market recovery and good operating performance in Q3

- Global drop in demand and interruptions in the supply chain led to production stoppages and short-time working at Audi sites, especially in the first six months - significant impact on delivery volumes and financial performance

- Positive trend expected to continue in the fourth quarter - unless there are further restrictions due to the coronavirus pandemic
 

-- DELIVERIES OF CARS OF THE AUDI BRAND

- Declined by -13 percent to 1,187,190 (1,357,102) vehicles as the car market fell by -20 percent

- On a cumulative basis, China was 4 percent above prior-year level thanks to strong market demand

- Deliveries to customers were up 6 percent year-on-year in the third quarter thanks to recovery in core markets
 

-- REVENUE

- Year-on-year drop overall to EUR 33.3 (41.3) billion, but already 2 percent above prior-year level in the third quarter

 

-- OPERATING RESULT

- Strong third quarter offset coronavirus-induced losses from the first six months

- Cumulative: EUR 0.1 (3.2) billion [before special items: EUR 0.2 (3.2) billion]

- Special items of EUR -0.1 (-) billion in connection with the diesel issue

 

-- OPERATING RETURN ON SALES

- At 0.3 (7.8) percent [before special items: 0.7 (7.8) percent]

 

-- NET CASH FLOW

- EUR 3.8 (3.3) billion due to crisis-related prioritization of investment, active inventory management and one-time effects from transactions relating to participations; net liquidity still high at EUR 21.7 (21.8) billion
 

-- OUTLOOK FOR 2020 AS A WHOLE

- Deliveries and revenue significantly lower than in prior year; operating result substantially lower, but expected to be clearly positive

- Net cash flow expected to be at prior-year level; return on investment (ROI) probably below prior year and below our minimum rate of return of 9 percent

- R&D ratio below prior-year level despite revenue loss due to coronavirus pandemic; ratio of capex significantly below prior year

- The Audi Group is now cautiously optimistic about the rest of the year, but it is hardly possible to estimate the impact of the second wave of the corona pandemic reliably.
 

 

EXTRAORDINARY EVENTS

- GLOBAL SPREAD OF CORONAVIRUS (SARS-COV-2)

At the end of December 2019, the first cases of a disease caused by a new type of virus from the coronavirus family (SARS-CoV-2) were reported in China. The number of people infected worldwide rose sharply in the first nine months of 2020 - although there were regional differences in the intensity of the outbreaks. To slow the spread of SARS-CoV-2 and contain the resulting pandemic, many governments around the world have introduced measures since the first quarter of 2020. These include lockdowns, for example, which have led to massive restrictions on public life and economic activity.
The pandemic has given rise to massive challenges, both for the economy as a whole and for Audi, especially as a result of the drop in consumer demand and supply bottlenecks. At the German sites in Ingolstadt and Neckarsulm, this led to production stoppages and, consequently, to the introduction of short-time working in the areas affected. There were also production stoppages at many foreign sites. Audi restarted automotive production stepwise at its sites from the end of April. By the end of the second quarter, all production sites had resumed operation. Customer demand recovered and the situation in our production network stabilized further in the third quarter of 2020.
To actively manage the crisis, a cross-divisional crisis management team has been set up to manage and coordinate all measures. The crisis management team is continuously monitoring the situation as regards the further spread of the pandemic. The health of our employees has top priority. At the same time, the focus since the further spread of coronavirus has been on keeping core processes stable and optimizing cash flows in order to protect Audi's ability to operate.
In addition to production stoppages caused by low demand and the supply chain situation, the turbulence on the raw material and financial markets as a result of the coronavirus pandemic had a significant impact on the performance of the Audi Group in the first nine months of 2020.
Overall, the Audi Group was affected in many different fields in the reporting period. These are outlined in more detail in this quarterly report.
The Audi Group is now cautiously optimistic about the rest of the year, but it is hardly possible to estimate the impact of the second wave of the corona pandemic reliably.

- VOLKSWAGEN AG INITIATES THE FULL TAKEOVER OF AUDI SHARES

As part of the realignment of competences and responsibilities in the Volkswagen Group, the company Volkswagen AG, Wolfsburg, has initiated a squeeze-out under German stock corporation law to increase its shareholding in AUDI AG, Ingolstadt, from 99.64 percent at present to 100 percent. In an ad hoc announcement issued on June 16, 2020, AUDI AG reported that Volkswagen AG had set the cash settlement for the transfer of the shares in AUDI AG held by minority shareholders at EUR 1,551.53 per share. On July 31, 2020, the 131st Annual General Meeting of AUDI AG passed a resolution to transfer the shares held by the minority shareholders to the majority shareholder, Volkswagen AG. This resolution will become effective when it is entered in the commercial register. The minority shareholders will then receive the aforementioned cash settlement as consideration for the transfer of their shares. Employee codetermination, the independence of the Audi brand within the Volkswagen Group and the legal form of AUDI AG as a German stock corporation (Aktiengesellschaft) will not be affected by the squeeze-out.

 

BUSINESS AND UNDERLYING SITUATION ¹⁾

Growth in the gross domestic product and car markets of selected countries/regions

	Gross domestic product [in %]					Car markets [in vehicles]
	1-9/2020	1-9/2019				1-9/2020		1-9/2019		∆ in %
Europe	-8.0	1.5				9,809,393		13,568,406		-27.7
of which: Western Europe	-8.4	1.4				7,817,829		11,091,343		-29.5
of which: Germany	-6.3	0.7				2,041,831		2,740,158		-25.5
United Kingdom	-11.2	1.3				1,243,656		1,862,271		-33.2
Italy	-11.6	0.4				971,676		1,474,525		-34.1
Spain	-12.8	2.0				647,523		1,045,332		-38.1
France	-11.0	1.7				1,164,256		1,636,662		-28.9
of which: Central/Eastern Europe	-4.7	1.5				1,991,564		2,477,063		-19.6
of which: Russia	-4.6	1.0				1,025,614		1,182,386		-13.3
China 2)	0.8	6.2				13,374,216		15,241,927		-12.3
Japan	-6.2	1.1				2,835,742		3,463,341		-18.1
USA	-3.9	2.1				10,340,541		12,756,586		-18.9
Canada	-6.3	1.7				1,145,055		1,500,955		-23.7
Mexico	-10.3	-0.1				664,218		955,393		-30.5
Brazil	-6.2	1.0				1,301,658		1,940,166		-32.9
Worldwide	-4.5	2.6				47,273,314		59,276,068		-20.2

 

1) The prior-year figures may have changed as a result of updated data; provisional figures for the first nine months of 2020.
2) Chinese car market including Hong Kong
 

- GLOBAL ECONOMIC SITUATION

As a consequence of the global spread of coronavirus, during 2020 many governments imposed restrictive measures - for example, the closure of borders and extensive contact restrictions - which led to a massive curtailment of public life and economic activity. At the same time, in some cases considerable fiscal and monetary policy measures were adopted to counter the anticipated economic crisis. Due to the resulting drop in demand and supply, global economic output fell significantly, by -4.5 (2.6) percent in the first nine months of 2020 compared with the same period of the previous year. The impact varied greatly from one country to another as there were time differences in the spread of the virus and the associated measures. The comparatively low interest rates worldwide dropped further in the reporting period. The currencies of some emerging markets depreciated considerably against the euro in the first nine months of 2020. On the financial markets, security prices were highly volatile in the reporting period.
Although the global economic growth rate was negative in the third quarter of 2020, it was considerably better than in the second quarter of the year. Measured by gross domestic product, the economic growth trend in Europe and the USA developed analogously in this period. By contrast, the Chinese economy already showed a positive trend in gross domestic product in the second and third quarters of 2020.

- INTERNATIONAL CAR MARKET

Global demand for passenger cars dropped by -20.2 percent to 47.3 (59.3) million vehicles year-on-year between January and September 2020 due to the coronavirus pandemic. All regions were affected by this downturn. Above-average declines were reported, in particular, by the Western Europe region, where demand fell by -29.5 percent to 7.8 (11.1) million vehicles. Significant declines were also reported in Central and Eastern Europe, where demand dropped by -19.6 percent to 2.0 (2.5) million vehicles, in China including Hong Kong, with a drop of -12.3 percent to 13.4 (15.2) million vehicles, and the USA, where demand fell by -18.9 percent to 10.3 (12.8) million vehicles.
Overall, however, there were clear signs of an upturn in demand in all regions in the third quarter, and the passenger car markets in Russia and China reported growth compared with the prior-year quarter.

- INTERNATIONAL MOTORCYCLE MARKET

From January to September 2020, the motorcycle markets in the displacement segment above 500 cc recorded a drop in demand of -4.9 percent due to the pandemic. The worldwide motorcycle markets developed at very different rates, with some markets already showing a recovery compared with the situation after the first six months.

PRODUCTION

In the first three quarters of 2020, the Audi Group produced a total of 1,131,660 (1,321,501) cars and 34,108 (44,392) motorcycles. The premium Audi brand accounted for 1,126,555 (1,315,009) cars. This figure includes 464,991 (418,140) Audi vehicles built locally by the associate FAW-Volkswagen Automotive Company, Ltd., Changchun (China). Automobili Lamborghini S.p.A. built 5,105 (6,492) vehicles of the Lamborghini brand at its company headquarters in Sant'Agata Bolognese (Italy) in the reporting period.

The -14.4 percent decline in the Automotive segment compared with the prior-year period is principally attributable to the global economic situation in the context of the spread of coronavirus. During the first quarter of 2020, we therefore adjusted production, not simply because of the significant reduction in demand, but also in response to supply chain difficulties and factory shutdowns ordered by the authorities in some countries. The production stoppages at the Chinese facilities mainly had an impact in February 2020. The production volume in China stabilized gratifyingly as early as March, and by the end of September 2020 there was actually a cumulative year-on-year rise of 11.2 percent. In the reporting period, the Audi Q3 Sportback was produced locally in Tianjin (China) for the first time by the associate FAW-Volkswagen Automotive Company, Ltd., Changchun (China). Moreover, following the start of production of the Audi Q2 L e-tron in Changchun (China) in 2019, local production of a second fully electric vehicle - the Audi e-tron - started at this site in the third quarter of 2020. Following expansion of the factory in Qingdao (China), production of the Audi A3 Sportback in the fourth generation of the Audi A3 family commenced there. From mid-March 2020, there was a controlled production shutdown at the European sites owing to the coronavirus pandemic. Production was restarted stepwise from the end of April 2020. Our site in San José Chiapa (Mexico) was only able to restart production in June 2020 as the pandemic spread later in Mexico. The situation in our production network continued to stabilize in the third quarter of 2020, and between July and September 2020 we were able to increase output by 13.8 percent year-on-year as a follow-on effect of the previous pandemic-induced declines.

Production of the new Audi A3 Sportback and the new Audi A3 Sedan started in Ingolstadt in the reporting period. That was a major milestone in the introduction of the new generation of the A3 family.

Worldwide, the Audi Group produced 456,013 (400,824) vehicles and 9,951 (9,633) motorcycles in the third quarter of 2020. Of the total number of cars produced, the Audi brand accounted for 454,139 (398,925) units. 186,395 (151,036) Audi vehicles were manufactured by the associate FAW-Volkswagen Automotive Company, Ltd., Changchun (China). The Lamborghini brand produced 1,874 (1,899) vehicles.

Production of Audi brand cars by site

	1-9/2020	1-9/2019
Germany	330,462	467,436
Ingolstadt	224,261	333,815
Neckarsulm	106,201	133,621
International	796,093	847,573
Changchun (China)	324,436	309,780
Győr (Hungary)	111,141	122,396
Foshan (China)	86,026	83,581
San José Chiapa (Mexico)	81,537	127,373
Bratislava (Slovakia)	69,296	86,791
Tianjin (China)	54,438	24,779
Martorell (Spain)	41,449	61,186
Brussels (Belgium)	25,782	27,768
São José dos Pinhais (Brazil)	1,361	1,794
Aurangabad (India)	536	2,125
Qingdao (China)	91	-
Audi brand	1,126,555	1,315,009

 

Car production by model ¹⁾

	1-9/2020	1-9/2019
Audi A1 Sportback	41,445	61,168
Audi Q2 2)	86,748	93,254
Audi A3 Sportback	77,298	93,871
Audi A3 Sedan	65,121	76,838
Audi A3 Cabriolet	4,620	6,563
Audi Q3	113,428	133,421
Audi Q3 Sportback	41,036	3,600
Audi TT Coupé	4,919	9,996
Audi TT Roadster	1,576	2,605
Audi A4 Sedan	119,850	169,577
Audi A4 Avant	35,169	62,590
Audi A4 allroad quattro	4,387	6,876
Audi A5 Sportback	25,144	51,411
Audi A5 Coupé	3,176	9,585
Audi A5 Cabriolet	4,463	8,838
Audi Q5	185,794	212,336
Audi A6 Sedan	156,198	121,998
Audi A6 Avant	27,776	41,446
Audi A6 allroad quattro	6,519	3,209
Audi A7 Sportback	11,693	10,907
Audi e-tron	17,109	27,621
Audi e-tron Sportback	8,687	147
Audi Q7	43,980	52,514
Audi Q8	25,316	34,716
Audi A8	14,066	18,211
Audi R8 Coupé	644	1,143
Audi R8 Spyder	393	568
Audi brand	1,126,555	1,315,009
Lamborghini Urus	3,120	3,994
Lamborghini Huracán	1,395	1,751
Lamborghini Aventador	590	747
Lamborghini brand	5,105	6,492
Automotive segment	1,131,660	1,321,501

 

1) The table includes 464,991 (418,140) Audi models produced by the associate
FAW-Volkswagen Automotive Company, Ltd., Changchun (China).

2) This includes 1,764 (58) fully electric Audi Q2 L e-tron models built by the associate
FAW-Volkswagen Automotive Company, Ltd., Changchun (China), for the Chinese market.

Production of engines and electric powertrains

	1-9/2020	1-9/2019
Audi Hungaria Zrt.	1,166,113	1,526,621
Automobili Lamborghini S.p.A.	618	735
Engines and electric powertrains	1,166,731	1,527,356

 

The Audi Group produced a total of 1,166,731 (1,527,356) engines and electric powertrains in the first three quarters of 2020. Output declined by -23.6 percent compared with the prior-year period due to the effects of the coronavirus pandemic. Audi Hungaria Zrt. in Győr (Hungary) responded with a controlled production stoppage in mid-March. However, production of engines and electric powertrains resumed in stages from mid-April 2020. Due to the rising demand for cars, from August 2020 production of engines and electric powertrains was higher than in the respective months of the previous year. As a result, in the third quarter of 2020 production was only -3.6 percent lower than in the prior-year period.

Motorcycle production

	1-9/2020	1-9/2019
Scrambler	6,185	8,074
Naked/Sport Cruiser (Diavel, Monster, Streetfighter)	13,029	13,056
Dual/Hyper (Hypermotard, Multistrada)	7,643	15,269
Sport (SuperSport, Panigale)	7,251	7,993
Motorcycles segment - Ducati brand	34,108	44,392

 

Worldwide, the Ducati brand produced a total of 34,108 (44,392) motorcycles in the first nine months of 2020. The -23.2 percent decrease is likewise attributable to the effects of the coronavirus pandemic. 26,999 (36,999) units were built at the company headquarters in Bologna (Italy). In the same period, Ducati also produced 6,196 (6,789) motorcycles at the Amphur Pluakdaeng site in Thailand. In addition, 913 (604) motorcycles were built in Manaus (Brazil) on a contract manufacturing basis.

DELIVERIES AND DISTRIBUTION ¹⁾

1) The figures for the prior-year period have been marginally adjusted.

The Audi Group delivered 1,192,858 (1,363,659) cars to customers worldwide between January and September 2020. 1,187,190 (1,357,102) vehicles of the Audi brand were delivered to customers. With a pandemic-induced decline of -12.5 percent, deliveries of Audi brand vehicles developed less negatively than overall market demand, which recorded a considerable drop of -20.2 percent. While the Chinese market was most severely affected by the impact of coronavirus in February 2020, the pandemic spread to other major markets in March. In particular, statutory measures such as the closure of dealerships and lockdowns led to a significant drop in deliveries. In China, however, the number of deliveries has picked up considerably since March 2020. Cumulatively, deliveries to customers in China increased by 4.4 percent year-on-year in the first nine months of 2020.
In Europe too, dealerships gradually reopened from April 2020 as the authorities eased restrictions. Dealerships in the USA have also been open again since April 2020, depending on the regulations in place in individual states. Since then, there have been signs of an upturn in demand from customers and thus in order intake in Europe and North America, although with considerable regional differences. This upward trend is also reflected in deliveries in the third quarter of 2020; in this quarter, worldwide deliveries of the Audi brand increased by 6.4 percent year-on-year. Despite the overall decline in deliveries to customers in the first nine months, the Audi e-tron, Audi Q3, Audi A6 and Audi A8 car lines posted a positive trend compared with the prior-year period.

Deliveries of Audi brand cars to customers by region

	1-9/2020	1-9/2019
Europe	440,832	595,132
of which: Western Europe	410,463	559,994
of which: Germany	153,196	215,515
United Kingdom	80,477	113,336
Italy	35,053	47,811
France	30,478	42,346
Spain	27,032	39,589
Belgium	18,598	23,892
of which: Central/Eastern Europe	30,369	35,138
of which: Russia	10,131	11,346
China incl. Hong Kong	512,891	491,040
Japan	15,518	17,792
USA	124,103	158,471
Canada	18,730	25,071
Mexico	6,451	8,895
Brazil	4,482	5,796
Other markets	64,183	54,905
Worldwide	1,187,190	1,357,102

 

In April 2020, the new generation of the Audi A3 family was presented to dealers exclusively digitally for the first time, starting with the Audi A3 Sportback, and successively launched on markets. The Audi A3 Sedan was introduced in July 2020; a version with natural gas drive and a plug-in hybrid model will be added to the portfolio by the end of the year.
The second model in the successful Audi e-tron line, the fully electric Audi e-tron Sportback, was successfully launched in Europe in May 2020, followed by the stepwise introduction on further markets. Following on from the Sedan as a plug-in hybrid model, for which orders have been accepted since the first quarter of 2020, the Avant was introduced in summer 2020 as a further electric model in the A6 car line.
The Lamborghini brand delivered a total of 5,631 (6,517) vehicles to customers in the first nine months of 2020. As a result of the global spread of the coronavirus pandemic and the production stoppage at Sant'Agata Bolognese in Italy, deliveries fell by -13.6 percent compared with the prior-year period, although orders on hand were stable.

Car deliveries to customers by model ²⁾

	1-9/2020	1-9/2019
Audi A1	-	153
Audi A1 Sportback	45,956	62,616
Audi Q2 3)	90,702	98,043
Audi A3	-	15
Audi A3 Sportback	84,028	113,274
Audi A3 Sedan	69,160	82,267
Audi A3 Cabriolet	4,998	7,342
Audi Q3	116,733	129,869
Audi Q3 Sportback	35,642	346
Audi TT Coupé	5,804	9,143
Audi TT Roadster	1,876	3,201
Audi A4 Sedan	126,466	178,116
Audi A4 Avant	44,141	64,654
Audi A4 allroad quattro	5,687	5,383
Audi A5 Sportback	36,272	57,544
Audi A5 Coupé	5,714	10,545
Audi A5 Cabriolet	6,139	9,030
Audi Q5	182,916	219,365
Audi A6 Sedan	160,196	119,455
Audi A6 Avant	27,247	46,110
Audi A6 allroad quattro	6,143	2,028
Audi A7 Sportback	12,583	13,574
Audi e-tron	27,475	16,159
Audi e-tron Sportback	4,307	18
Audi Q7	43,648	61,949
Audi Q8	26,550	31,299
Audi A8	15,626	14,216
Audi R8 Coupé	669	951
Audi R8 Spyder	433	437
Internal vehicles before market introduction	79	-
Audi brand	1,187,190	1,357,102
Lamborghini Urus	3,278	3,896
Lamborghini Huracán	1,672	1,751
Lamborghini Aventador	681	870
Lamborghini brand	5,631	6,517
Other Volkswagen Group brands	37	40
Automotive segment	1,192,858	1,363,659

 

2) The table includes deliveries of 477,497 (446,330) vehicles built locally by the associate FAW-Volkswagen Automotive Company, Ltd., Changchun (China).

3) This includes 3,036 (-) fully electric Audi Q2 L e-tron models for the Chinese market.

Motorcycle deliveries to customers

	1-9/2020	1-9/2019
Scrambler	7,535	9,655
Naked/Sport Cruiser (Diavel, Monster, Streetfighter)	13,035	11,297
Dual/Hyper (Hypermotard, Multistrada)	9,889	14,078
Sport (SuperSport, Panigale)	8,330	8,796
Motorcycles segment - Ducati brand	38,789	43,826

 

The Ducati brand delivered 38,789 (43,826) motorcycles to customers worldwide between January and September 2020. Here too, the decline of -11.5 percent compared with the previous year was due to the worldwide spread of coronavirus. Delivery figures in the Motorcycles segment have also recovered noticeably since the restrictions started to be relaxed. In the third quarter of 2020, deliveries were 21.4 percent higher than in the same period of 2019.

In the third quarter of 2020, deliveries of the Audi Group increased to 482,066 (452,899) vehicles worldwide. The Audi brand delivered a total of 479,965 (450,922) models, including 193,676 (167,054) built locally by FAW-Volkswagen Automotive Company Ltd., Changchun (China). Between July and September 2020, the Lamborghini brand delivered a total of 2,083 (1,964) vehicles worldwide, while the Ducati brand's delivery volume was 14,694 (12,104) motorcycles in the same period.

Audi and Lamborghini models introduced in the period under review

Q1/2020
Electric models
Audi A6 Sedan TFSI e
Models with conventional drive system
Audi R8 V10 RWD Coupé/Spyder	Audi A5/S5 family			Lamborghini Huracán EVO RWD

 

Q2/2020
Electric models
Audi e-tron Sportback
Models with conventional drive system
Audi RS 5 Sportback/Coupé	Audi A3 Sportback			Lamborghini Huracán EVO RWD Spyder

 

Q3/2020
Electric models
Audi A6 Avant TFSI e
Models with conventional drive system
Audi A3 Sedan

 

New model, no predecessor // New model // Product improvement

 

Ducati models introduced in the period under review

The Panigale V2 with numerous improvements in terms of design and performance was the first new model to be available at dealers in 2020. The new Panigale V4 with a range of optimizations is already available from dealers, too.
In March 2020, the new Streetfighter V4 came onto the market and the S version has also become available since then. Another new motorcycle introduced in the 2020 model year is the Multistrada 1260 S Grand Tour, a special version of the 1260 S.
Two new Icon Dark models in the Scrambler series - the Scrambler 1100 PRO and Scrambler 1100 Sport PRO - have been at dealers since the end of March. In June 2020, production and deliveries started of the Superleggera V4, which is limited to an edition of 500 units. Also in June, Ducati presented the new Hypermotard 950 RVE. This has been available from dealers since June and has a special "graffiti" paint finish. The new Multistrada 950 GP White has been introduced since July and is available from Ducati dealers, as is the new White Rosso paint finish of the Panigale V2. The new Scrambler 1100 PRO and the Scrambler 1100 Sport PRO have now arrived in Japan and India, while the Streetfighter V4 and the Panigale V2 are now available on the Chinese market.

FINANCIAL PERFORMANCE INDICATORS

- CHANGES TO THE GROUP OF CONSOLIDATED COMPANIES

Since January 1, 2020, the Volkswagen Group has consolidated participations and subsidiaries that develop software in the vehicle and for further digital applications in the Car.Software organization. In this connection, in January 2020, Audi sold Audi Electronics Venture GmbH, Gaimersheim, which had been included in the consolidated financial statements as a fully consolidated holding company without its own business operations until December 31, 2019.

In addition, Audi Japan Sales K.K., Tokyo (Japan), was sold within the Volkswagen Group effective March 30, 2020.

On July 12, 2019, Volkswagen AG, Wolfsburg, announced that, together with Ford Motors Corporation, Dearborn (USA), it would invest in Argo AI, Pittsburgh (USA), a company that specializes in software platforms for autonomous driving, and that this would be effected, among other things, by the contribution of Autonomous Intelligent Driving GmbH, Munich, a fully consolidated subsidiary of AUDI AG. The contribution of Autonomous Intelligent Driving GmbH was made as of June 1, 2020. Prior to that, AUDI AG had sold the company within the Volkswagen Group.

There were no other changes to the group of consolidated companies.

- INVESTMENTS IN ASSOCIATES

At the start of 2020, AUDI AG held 5 percent of the shares in FAW-Volkswagen Automotive Co., Ltd., Changchun (China), which, among other activities, produces and distributes Audi brand vehicles for the Chinese market. On May 15, 2020, AUDI AG entered into a trust agreement under which it transferred the beneficial ownership of 4 percent of the shares of FAW-Volkswagen Automotive Co., Ltd., to Volkswagen AG. This means that the share of the investment accounted for using the equity method is now measured on the basis of an interest of 1 percent. Through its representation in this company's management and supervisory board, AUDI AG remains in a position to exercise significant influence.

In January 2020, a capital increase was implemented at THERE Holding B.V., Rijswijk (Netherlands), in which Audi participated. In December 2019, it was announced that additional investors would acquire shares in HERE International B.V., Eindhoven (Netherlands). Following the signing in December 2019, and approval by all antitrust authorities, Mitsubishi Corporation (MC), Tokyo (Japan), and Nippon Telegraph and Telephone Corporation of Japan (NTT), Tokyo (Japan), jointly acquired 30 percent of the shares in HERE International B.V. as of May 29, 2020. The interest held by THERE Holding B.V. in HERE International B.V. was consequently reduced from approximately 85 percent to approximately 60 percent. In connection with the sale of the shares, a capital decrease was implemented at the level of THERE Holding B.V. in June 2020 and September 2020. Audi's interest in THERE Holding B.V. continues to amount to around 29.7 percent.

- FINANCIAL PERFORMANCE

The Audi Group generated revenue of EUR 33,264 (41,332) million in the first nine months of 2020. The year-on-year decline was mainly due to lower demand in the first six months in connection with the coronavirus pandemic.
In the Automotive segment, revenue came to a total of EUR 32,754 (40,765) million. Revenue from the sale of vehicles of the Audi brand fell to EUR 21,991 (29,577) million as a result of the market situation. Year-on-year, a positive revenue trend was reported, among others, by our fully electric Audi e-tron. Revenue from engines, electric motors, powertrains and parts deliveries was above the prior-year level at EUR 6,468 (6,053) million. Parts deliveries for local production in China had a particularly positive impact here. Due to the coronavirus pandemic, the Lamborghini brand also reported a year-on-year drop in revenue from vehicles to EUR 1,182 (1,343) million.

In the Motorcycles segment, the Ducati brand generated revenue of EUR 509 (567) million. The decrease is also attributable to the effects of the coronavirus pandemic.

Key operating performance figures, Audi Group

EUR million	1-9/2020	1-9/2019
Operating result before special items	221	3,239
Special items	-108	-
Operating result	114	3,239
Automotive segment	98	3,200
Motorcycles segment	16	39
adjusted for effects of PPA 1)	29	56
Profit before tax	1,202	3,668

 

in %	1-9/2020	1-9/2019
Operating return on sales before special items	0.7	7.8
Operating return on sales	0.3	7.8
Automotive segment	0.3	7.8
Motorcycles segment	3.1	6.9
adjusted for effects of PPA 1)	5.6	9.9
Return on sales before tax	3.6	8.9

 

1) Effects of purchase price allocation

The development of operating activities is reflected in the operating result before special items of EUR 221 (3,239) million. The operating return on sales before special items was 0.7 (7.8) percent in the first nine months of 2020. As a result of special items of EUR -108 (-) million in the second quarter of 2020 in connection with the diesel issue, the operating result of the Audi Group was EUR 114 (3,239) million, giving an operating return on sales of 0.3 (7.8) percent. Special items are certain items that are reflected in the financial statements whose separate disclosure we believe allows a better assessment of the economic performance of the Audi Group.
In addition to the negative market development, the principal factors here were the turbulent raw material and financial markets which led to significant negative fair value impacts from commodity derivatives an