CREATING A GLOBAL CHAMPION COMPANY PRESENTATION NOVEMBER 2018

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Amberly Mills
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1 CREATING A GLOBAL CHAMPION COMPANY PRESENTATION NOVEMBER 2018

2 DISCLAIMER The following presentation contains forward-looking statements and information on the business development of TRATON. These statements and information may be spoken or written and can be recognized by terms such as expects, anticipates, intends, plans, believes, seeks, estimates, will, targets or words with similar meaning. These statements and information are based on assumptions relating to the companies' business and operations, regulatory framework and the development of the economies in the countries in which the company is active. TRATON has made such forward-looking statements on the basis of the information available to it and assumptions it believes to be reasonable. The forward-looking statements and information may involve risks and uncertainties, and actual results may differ materially from those forecasts. If any of these or other risks or uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such forward looking statements and information. Neither TRATON nor Volkswagen will update the following presentation, particularly not the forward-looking statements. The presentation is valid on the date of publication only. When describing TRATON and its business in the following presentation, and unless designated otherwise, information has been derived from publicly available sources, in particular annual reports and other regular information published by Volkswagen AG, MAN SE and Scania AB and all references to (i) MAN are references to MAN Truck & Bus (reported as MAN Truck & Bus by MAN SE), (ii) Volkswagen Caminhões e Ônibus are references to MAN Latin America as reported by MAN SE and (iii) Scania are references to the reported information of Scania. As of 8 October 2018, TRATON AG held 86.87% of the shares in MAN SE (87.04% of voting rights). All references to sales of bus and coach also include chassis. While the Power Engineering business is currently a part of TRATON, it is not included in the commercial vehicles operations, as described in this presentation. The financial information and financial data included in this presentation are preliminary, unaudited and may be subject to revision upon completion of the preparation and audit of TRATON s consolidated financial statements. TRATON has not yet prepared consolidated accounts for any period. Consequently, the information that will be shown in the TRATON financial statements may differ from the information contained herein. Thus, statements contained in this presentation should not be unduly relied upon and past events or performance should not be taken as a guarantee or indication of future events or performance. Return on sales as used in this presentation is defined as operating profit margin (operating profit divided by revenue). In particular, operating profit and revenue at the level of TRATON are calculated as sum of MAN Commercial Vehicles and Scania as reported by Volkswagen AG and it should be noted that operating profit (i) reported by Volkswagen AG excludes special items and (ii) at the level of TRATON excludes purchase price allocation (PPA) effects from acquisitions and TRATON holding costs. Financial figures in relation to Scania (i) include financial services (unless denoted otherwise) and (ii) when expressed in EUR have been translated from SEK into EUR, using the exchange rate prevailing at the relevant date or for the relevant period that the relevant financial figures relate to. Operating and financial data relating to alliance partners are as reported by the relevant partner. To the extent available and unless denoted otherwise, the industry and market data contained in this presentation has been derived from official or third party sources and all market and market share data that is not labelled otherwise, has been derived from data published by IHS Markit Ltd. for heavy duty truck (>15t) and (unless denoted otherwise) relates to calendar year Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While TRATON believes that each of these publications, studies and surveys has been prepared by a reputable source, neither TRATON nor Volkswagen has independently verified the data contained therein. In addition, certain of the industry and market data contained in this presentation are derived from TRATON's internal research and estimates based on the knowledge and experience of its management in the markets in which it operates. TRATON believes that such research and estimates are reasonable and reliable, but their underlying methodology and assumptions have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry or market data contained in this presentation. This presentation has been prepared for information purposes only. It does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Volkswagen AG, TRATON AG or any company of Volkswagen or TRATON in any jurisdiction. Neither this presentation, nor any part of it, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contractual commitment or investment decision in relation to the securities of Volkswagen AG, TRATON AG or any company of Volkswagen or TRATON in any jurisdiction, nor does it constitute a recommendation regarding any such securities. 2

TRATON HAS DELIVERED ON ITS STRATEGIC GOALS SINCE THE INCEPTION OF VOLKSWAGEN TRUCK & BUS Collaboration among brands in VW T&B fully on track On the way to become Capital Market

7% New corporate identity Successful creation and implementation of strategic alliances 2015 2 2016 3 2017 Sep-18 YTD 4 Significant performance improvement 1 As reported.

3 TRATON HAS DELIVERED ON ITS STRATEGIC GOALS SINCE THE INCEPTION OF VOLKSWAGEN TRUCK & BUS Collaboration among brands in VW T&B fully on track On the way to become Capital Market Ready New legal entity 5.0% Return on Sales 1 6.9% 6.1% 6.7% New corporate identity Successful creation and implementation of strategic alliances Sep-18 YTD 4 Significant performance improvement 1 As reported. Including holding cost and PPA. 2 Excluding one-time MAN restructuring expenses of (185)m. 3 Excluding one-time Scania antitrust fine of (403)m and one-time VWCO restructuring expenses of (58)m. 4 Q1 to Q cumulative including (115)m one-time effect due to market exit / plant closure at MAN India. 3

4 TRATON AT A GLANCE LEADING GLOBAL BRANDS AND PARTNERSHIPS Fully consolidated Associates Strategic partner 25% + 1 share c. 17% Leader in core markets with differentiated brands and successful collaboration model Powerful partnerships to create leading global scale and access 4

5 TRATON AT A GLANCE SNAPSHOT 2017 Russia, Middle East, Asia/Pacific and other TRATON unit sales 1 by geography (% of total) 33% 16% Germany Scania TRATON revenues by brand ( bn / % of total) VW Caminhões e Ônibus 12.8 (54%) 1.1 (5%) 10.0 (42%) MAN TRATON operating profit by brand ( bn / RoS %) Scania % VWCO % MAN Brazil 11% 40% 2 Europe (ex Germany) 205k Units sold bn Revenues 1.7bn Operating profit 6.9% RoS Note: Trucks >6t, Volkswagen Caminhões e Ônibus trucks 5t; figures are financially rounded. 1 TRATON commercial vehicles total figures (incl. c. 2k units of MAN TGE vans) based on company information. 2 Europe comprises EU28 + Switzerland + Norway. 3 VW Caminhões e Ônibus with operating loss of (0.1)bn in 2017 (RoS of (9.2)%). 5

TRATON AT A GLANCE UNIQUE POSITIONING OF BRANDS Creating a global

Simplifying business by being the most reliable business partner Less

leader for sustainable transport solutions Reliable business partner

6 TRATON AT A GLANCE UNIQUE POSITIONING OF BRANDS Creating a global champion Driving the shift towards a sustainable transport system Simplifying business by being the most reliable business partner Less you don t want more you don t need Premium customer-focused innovation leader for sustainable transport solutions Reliable business partner with value package and full-line offering Best value for money and tailor-made products 6

TRATON CREATING A GLOBAL CHAMPION 1 GLOBAL CHAMPION Our

unique platform, enabling global reach and positioning

value focused product and service offering and

earnings potential with concrete path to profitability

performance and tangible synergy upside 4 EXECUTION

7 TRATON CREATING A GLOBAL CHAMPION 1 GLOBAL CHAMPION Our leading brands and alliances provide scale for our unique platform, enabling global reach and positioning us for best in class profitability 2 GROWTH Customer value focused product and service offering and expansion in key geographies 3 PROFITABILITY Unique earnings potential with concrete path to profitability improvement driven by enhanced standalone brand performance and tangible synergy upside 4 EXECUTION Strong team with industry-leading track record executing our global champion strategy 7

8 Share of global profit pool TRUCK OEM PROFIT POOLS ARE SPREAD GLOBALLY WITH GROWTH POTENTIAL In bn NAFTA % Attractive market with high margins and upside from services Europe/ Russia % Attractive market with positive momentum from services Strong recovery expected, mainly coming from Brazil Latin America % Expected shift towards premium and upper budget segments in China Asia/ MEA % Thereof China Profit pool (EBIT) of truck OEM industry >6 tons (2017). 2 Incl. CA, MX, US. 3 Incl. AT, BE, DK, FI, FR, DE, GR, IE, IT, NL, NO, PT, ES, SE, CH, UK, BG, HR, CZ, EE, HU, LV, LT, PL, RO, SK, SI, BY, KZ, RU, UA, UZ. 4 Incl. BO, CL, CO, EC, PE, VE, BS, BB, BZ, BM, CR, CU, DO, SV, GT, HT, HN, JM, AN, NI, PA, TT, AR, BR, PY, UY, other Caribbean countries. 5 Incl. TR, CN, HK, TW, JP, KR, ZA, SA, ID, MY, PH, SG, TH, VT, IN, PK, AU, NZ. Source: McKinsey 8

: TRATON truck market share in 2017 (>15t) Core markets of TRATON brands TRATON WITH #1 TRUCK MARKET POSITIONS IN EUROPE AND LATAM 32%

30% market share Market leader in Brazil with 39% market share Note: Smaller presences in additional countries not highlighted (TRATON

Cyprus, Luxembourg and Malta (no data available from IHS) + Norway and Switzerland.

9 : TRATON truck market share in 2017 (>15t) Core markets of TRATON brands TRATON WITH #1 TRUCK MARKET POSITIONS IN EUROPE AND LATAM 32% Europe 1 Market leader with 32% market share Market leader in Germany with 37% market share Export business 30% LatAm 2 Market leader with 30% market share Market leader in Brazil with 39% market share Note: Smaller presences in additional countries not highlighted (TRATON active in >120 countries worldwide, incl. bus activities). 1 EU28 member states excl. Cyprus, Luxembourg and Malta (no data available from IHS) + Norway and Switzerland. TRATON s sales in Russia not included in calculation of Europe market share. 2 Incl. Argentina, Brazil, Bolivia, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela; excl. Mexico (part of NAFTA). 9

10 Strategic partner Alliance Partners Associates 1 GLOBAL Core markets of TRATON brands Truck market share in 2017 (>15t) Core markets of alliances EXPANDING GLOBALLY THROUGH ALLIANCE PARTNERS TO ADDRESS ALL MAJOR PROFIT POOLS 12% 1 North America Partnership since 2016 Technology cooperation: first SoPs until 2020/21 Synergies in procurement JV achieved, further potential 17% 2 China Partnership since 2009 Plan to localize MAN heavy duty truck in China Evaluation of technology/procurement cooperation 28% 3 Japan & South East Asia Cooperation since 2018 Cooperation: Future logistics/transportation, technology and e-mobility LOI for procurement JV signed; global synergy potential 1 Market share of Navistar in North America (Canada and USA). 2 Market share of CNHTC in China (incl. Hong Kong). 3 Market share of Hino in Japan and South East Asia (Indonesia, Australia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam). 10

GLOBAL TRUCK AND BUS PLATFORM WITH FOCUS

Japan Sales volume (k) 1 Trucks Buses 82

duty trucks Total 80% 91 88 26 264 69 184

respective area; figures are financially

December 2017; Navistar year-end October

2 Incl. ca. 2k MAN TGE vans. 3 Excl. c. 2k MAN TGE vans. 4 Incl.

11 CHAMPION 2 GROWTH EXECUTION 3 PROFITABILITY 4 Relates to % of total TRATON sales volume in 2017 (excl. associates and strategic partners) UNIQUE GLOBAL TRUCK AND BUS PLATFORM WITH FOCUS ON HEAVY DUTY TRUCKS TRATON Associates Strategic partner Home base Europe and Brazil Europe Brazil China North America Japan Sales volume (k) 1 Trucks Buses n/a n/a Heavy duty trucks Total 80% Medium/ Light duty trucks 2 11% Bus and Coach 9% Note: Trucks >6t, Volkswagen Caminhões e Ônibus trucks 5t; all figures as reported by VW AG, Scania AB and MAN SE, apart from Volkswagen Caminhões e Ônibus, for which the source is company information; pictures denote presence in respective area; figures are financially rounded. 1 Sales volume per fiscal year (Scania, MAN, VW CO, and Sinotruk year-end 31 December 2017; Navistar year-end October 2017 and HINO year-end March 2018). 2 Incl. ca. 2k MAN TGE vans. 3 Excl. c. 2k MAN TGE vans. 4 Incl. c. 108k in LDT volume. 5 Sales volume split not disclosed; excl. Toyota sales volume. 11

12 Truck Players Top 3 Alliances 1 GLOBAL CHAMPION 2 GROWTH EXECUTION 3 PROFITABILITY 4 LEADING ALLIANCE OF HEAVY DUTY BRANDS AS BASIS FOR EXPANSION AND SYNERGY REALIZATION Potential heavy duty platform reach of top OEMs incl. associates and strategic partners Sales volumes 2017, 1,000 units Leverage technologies and expertise through global brands 422 1,3 2 Partner #1 Partner #1 Partner #2 Partner #2 3 Leading powertrain technology Broad sales and service network Focus on accelerated benefits in partnership approach 4 TRATON associates TRATON strategic partner Note: Truck volumes (>15t) including selected strategic alliances. 1 Incl. partnerships with Dongfeng (45% ownership) and Eicher. 2 Incl. partnerships with Foton (50% ownership) and Kamaz. 3 Dongfeng incl. Dongfeng-Volvo JV sales volume. 4 Foton incl. Foton-Daimler JV sales volume. 12

13 TRATON WITH MULTIPLE STRATEGIC LEVERS FOR GROWTH Drive innovation Grow share Intelligent services by utilizing connected fleet of 450k+ vehicles of TRATON brands Alternative fuel solutions incl. electric e.g. e-delivery, e-bus and gas trucks Autonomous driving first trucks (mining system) sold New truck generation for each TRATON brand launched by 2020/21 Customer value / TCO focused products and services Leveraging (captive) sales and service network Go global Sustain core Mutually beneficial / smart partnerships Growing addressable segments in China, LatAm and other Emerging Markets Increase market penetration in Emerging Markets Market leadership in Europe and LatAm Benefit from stable and recovering markets Services/ aftersales on existing rolling fleet 13

14 Addressable market volume SUSTAIN CORE AND GO GLOBAL STRONG CORE MARKETS AND INCREASING EXPOSURE TO GLOBAL MARKETS FORM THE BASIS FOR FUTURE TOPLINE GROWTH Additional market volume Sustain core Go global Market volume truck sales >6t (2017), k Units Europe 1 ~370 Mid-term market outlook Robust volumes; services with positive impact on profits Market volume truck sales >6t (2017), k Units NAFTA ~470 Mid-term market outlook Current strong macroeconomic conditions with mixed outlook LatAm 2 ~100 Strong recovery expected post Brazil market downturn China ~1300 Premium and upper budget segment expected to grow Russia Other 3 ~80 Continued strong growth momentum accompanied by margin increase Successful global (export) business of premium trucks out of European / Brazilian home base S.E. Asia 4 & Japan ~330 Heterogenous markets with mixed growth outlook Maintain market leadership in Europe and Brazil Grow service revenues on existing rolling fleet Drive mutually beneficial / smart partnerships Expand profitable segments in China, LatAm and Emerging Markets 1 EU28+2 region (EU member states (excl. Cyprus, Malta, and Luxembourg (no IHS data available) + Norway, and Switzerland). 2 Incl. Argentina, Brazil, Bolivia, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela; Excl. Mexico (part of NAFTA); 39% HDT market share in Brazil. 3 Incl. e.g. Australia, China, SEA, South Africa, South Korea. 4 Australia, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam. 14

15 % of truck units of respective brand affected post full production ramp-up GROW SHARE BENEFIT FROM HIGHLY ATTRACTIVE PRODUCT PIPELINE New truck generation New truck generation New delivery truck Current / upcoming launch 100% 100% 60% New generation for all trucks (R, G and P trucks as well as newly introduced S and L trucks) New state of the art truck generation Modern truck for urban logistics tailored to emerging markets Launch / ramp-up Previous key launch 1 1 Previous key launch of respective product range. 4-Series (introduced in 1995) TGA (introduced in 2000) Delivery (introduced in 2005) 15

DRIVE INNOVATION TRATON IS TRANSFORMING TRANSPORTATION WITH NEW TECHNOLOGY First autonomous transport system in operation Large connected fleet 450k+ Among the broadest ranges of alternative fuels

16 DRIVE INNOVATION TRATON IS TRANSFORMING TRANSPORTATION WITH NEW TECHNOLOGY First autonomous transport system in operation Large connected fleet 450k+ Among the broadest ranges of alternative fuels Hybrid Natural Gas BEV HVO Ethanol Biogas Autonomous Mining System Connected vehicles on the road Here and now solutions Testing platooning under real traffic conditions Utilization of collected data for service offering Sold electric solutions to the market Note: HVO = Hydrogenated Vegetable Oil; BEV = Battery electric vehicle MAN Platooning on Autobahn A9 Scania Flexible Maintenance, Solera, RIO VW CO e-delivery 16

DRIVE INNOVATION EXAMPLE: CONNECTIVITY AT SCANIA Connected vehicles on the road >350k What data does Scania have? How can Scania monetize the data? Customers pay for reduced TCO.

17 DRIVE INNOVATION EXAMPLE: CONNECTIVITY AT SCANIA Connected vehicles on the road >350k What data does Scania have? How can Scania monetize the data? Customers pay for reduced TCO... and Scania benefits Scania knows when a truck needs service where a truck can be serviced what service a truck needs ~8.5k 2011 Q Location Speed Fuel Selected examples Mileage status Driving time Maintenance interval Win / Win Customer Higher uptime Demand-driven workshop visits Higher predictability Scania Higher workshop utilization Optimized NWC Feedback loops to R&D 17

18 TRATON WITH STRONG TRACK RECORD OF PERFORMANCE IMPROVEMENT ACROSS BRANDS AND FURTHER POTENTIAL TO BE REALIZED A Brand performance improvements B Synergies TRATON: Attractive margin upside Return on Sales % 10.1% 1 Joint powertrain 9.0% Target 1 2 New technologies 6.9% % % 3 Modularization and components 5.0% Target % Purchasing (incl. lead buying) -9.2% 2017 Target 1 5 Production footprint and logistics Target 2 Stand-alone upside Additional levers through alliances Benchmark profitability 1 Strategic target TRATON wants to achieve over the cycle. 2 Strategic target TRATON wants to achieve over the cycle, incl. holding costs and consolidation effects. 18

19 Track Record Current Focus 1 GLOBAL A OPERATIONAL PERFORMANCE IMPROVEMENTS IN PLACE ACROSS ALL THREE BRANDS Phase-out of double production line Ramp-up / dual costs for new product generation Leverage recovering Brazilian market Focus and Ambition program to improve COGS basis with 200+ dedicated employees NTG ramp-up globally Market shares in Europe ex- Germany Operational Excellence performance program New delivery truck generation Strengthen plant/logistic efficiency 2017 RoS: 10.1% RoS: 5.3% RoS: (9.2)% 1 Increased average price per vehicle and strong volumes in Europe Substantially more highmargin services sold Dual costs NTR / NTG truck generation 0.3%pts PACE performance program (mainly production, material costs and aftersales) Fixed cost degression from higher volumes driven by strong European market 3.0%pts Increased average price per vehicle Headcount reduction Weak demand due to Brazilian crisis 2.3%pts 2015 RoS: 9.8% RoS: 2.3% RoS: (11.5)% Note: Only selected key performance drivers displayed. 1 H RoS amounted to +2.0%. 19

20 B TRATON WITH STRUCTURED APPROACH TO SYNERGY EXPLORATION AND VISIBLE SYNERGIES AHEAD Description Pot. margin upside Timing on margin impact Selected examples of lever impact Purchasing (incl. lead buying) Lead buying of parts / components Shorter term Longer term Joint sourcing of propeller shaft Modularization and components Common components + + Shorter term Longer term Urea tank Common base engine, Joint powertrain after treatment, CBE 1 transmission and axle Shorter term Longer term New technologies Common electric powertrain, and Autonomous/ADAS + + Shorter term Longer term P160 (part of e-mobility) Production footprint and logistics Optimized global footprint and logistic + + Shorter term Longer term 1 Common Base Engine (13l) High + + Medium/Low Deep dive on next pages 20

B JOINT POWERTRAIN PLATFORM AND COMPONENTS AS

powertrain Common e-powertrain Deep dive on

Common axles E-drives / batteries Installed

trucks to date Common hypoid axle family

e-drive & VWAG battery cells as an option

21 B JOINT POWERTRAIN PLATFORM AND COMPONENTS AS ONE KEY LEVER TO REALIZE SYNERGIES Common ICE powertrain Common e-powertrain Deep dive on next page CBE new 13l engine GZ transmission Common axles E-drives / batteries Installed in >50% of HD trucks 1 In use by >40,000 MAN trucks to date Common hypoid axle family expected to start in 2021 Leverage joint e-drive & VWAG battery cells as an option Common aftertreatment GW transmission 1 Per year from 2025 onwards, incl. Navistar and excl. Sinotruk and Hino. Legend Key technology contributor 21

aiming at Enhanced fuel efficiency Long durability Europe Latin America Low maintenance CBE engine installed in HD trucks 1

22 B 1 GLOBAL Start of production CBE POWERTRAIN WILL BE ROLLED OUT ACROSS BRANDS AND EXPECTED TO BE INSTALLED IN >50% OF TRATON HD TRUCKS 1 BY 2025 TRATON Associates Leverage CBE powertrain across brands (illustrative CBE volumes) CBE powertrain aiming at Enhanced fuel efficiency Long durability Europe Latin America Low maintenance CBE engine installed in HD trucks Per year from 2025 onwards; roll-out across TRATON brands incl. Navistar and excl. Sinotruk and Hino. 22

23 STABLE PROFITS FROM SERVICES/ AFTERSALES REDUCE CYCLICALITY Truck OEMs: Stable industry profits from recurring, highmargin services/ aftersales business Large rolling fleet provides high degree of visibility on profitable growth outlook Revenues New truck sales Global industry as of 2015 Profits Services/ aftersales Resilience High share of trucks sold with service contracts Visibility Due to average contract length of 3 to 5 years material aftermarket business already locked in today Profitability Resilient and attractive profit stream from service contracts Growth of rolling fleet Attractive growth outlook with upside potential from increased rolling fleet across brands and new services Source: McKinsey 23

24 TRATON EXECUTIVE MANAGEMENT TEAM WITH STRONG TRACK RECORD AND LONGSTANDING INDUSTRY EXPERIENCE Andreas Renschler CEO Christian Schulz CFO Henrik Henriksson CEO Scania Joachim Drees CEO MAN Antonio Roberto Cortes CEO VWCO Anders Nielsen CTO Carsten Intra CHRO Dirk Große-Loheide CPO Years in industry 24

25 TRATON CREATING A GLOBAL CHAMPION GROWTH Sustain core Go global Grow share Drive innovation PROFITABILITY 6.9% RoS 9.0% 2017 Target 1 EXECUTION Strong track record Longstanding industry experience 1 Strategic target TRATON wants to achieve over the cycle, incl. holding costs and consolidation effects. 25

Volkswagen Group Capital Markets Day 2017 Volkswagen Truck & Bus

Volkswagen Group Capital Markets Day 2017 Volkswagen Truck & Bus Andreas Renschler Board of Management, Commercial Vehicles Capital Markets Day, 14 th of March 2017 Disclaimer The following presentations