Speech of Dr. Martin Winterkorn to the 115th Annual General Meeting

Only the spoken work is binding.

Part I

Dear Shareholders,
Ladies and Gentlemen,

I too should like to welcome you most cordially to our customer centre in Ingolstadt.

AUDI AG concluded the past year on a very successful note, posting new record levels of vehicle sales, production output, revenue and net profit.

The success of a car company is always founded on a successful models policy. The new Audi A3 was a crucial factor behind our success in 2003. The models in the A4 car line likewise secured an outstanding competitive position. The vehicles in our A6 car line became widely established as the market leaders in the fleet and company car sector.
And the new Audi A8, which is now also available with a twelve-cylinder top-of-the-range engine, is the ambitious winner in the luxury saloon segment.

From surveys and a great many exchanges with customers, we know that Audi is perceived as a dynamic, sporty and very sophisticated premium brand. We regard this strong image position as an important basis for Audi continuing to occupy a leading position in every important market worldwide.

The most compelling reason for the strength of the Audi brand, however, is the confidence that our customers have in us.

For this reason, I should like to start by thanking our customers for such confidence. Second, I should like to thank the workforce of around 53,000 people who work at AUDI AG. Without the support and considerable motivation of our team, we would not have been able to enjoy such success throughout these difficult times.

I would now like to turn my attention to the principal data for 2003.

The total revenue of the Audi Group rose by 3.6 percent in 2003, to a new record level of around 23 billion euros. This is a highly satisfactory level, in particular when compared with the competition.

Profit before tax amounted to some 1.1 billion euros.

Vehicle sales for the Audi Group broke through the one million barrier for the first time last year. Including unit sales by our Italian subsidiary Autogerma, we achieved a figure slightly in excess of one million vehicles.

At just under 770,000 units, the Audi brand bettered its previous record from 2002 by 3.7 percent.

It is once again notable how steady Audi’s success has remained. Vehicle sales rose for the tenth successive year.

Audi achieved another new record in posting sales of 86,400 vehicles in the USA: this is undoubtedly not an easy market, considering the fact that other manufacturers are prepared to offer their customers incentives of 4,000 dollars or more.

When we consider Western and Eastern Europe, excluding Germany, we are again a good one and a half percent up on our previous record figure. In other words, neighbouring markets too are delivering growth.

We believe that Eastern European markets will offer considerable potential for growth over the next few years: our vehicle sales figure of 14,400 put us in second place among Germany’s top manufacturers. The growth rates are by definition high, and absolute volumes are growing accordingly.

Great Britain yet again proved to be an exceptionally successful market for us, with a new record of more than 70,000 vehicles sold and a growth rate of almost seven percent.

The People’s Republic of China is now Audi’s fourth-largest market in the world. Our presence there stretches back some 15 years and we are leading the field in the intensely competitive premium market. We sold around 64,000 vehicles in China, most of them built locally.

I should now like to turn to our subsidiary Lamborghini. Last year not only saw the 40th anniversary of the company, but also an unprecedented rise in vehicle sales to a new record high.

1,305 super sports cars were shipped to customers in 2003, predominantly in Germany, the USA and other Western European countries.

This success is thanks to the exceptionally well-received Lamborghini Gallardo. It is impressing motoring journalists and customers alike. Sales of the top model, the Murciélago, remain very high.

I will now move on to other key figures of the Audi Group: the vehicle production volume at Audi and Lamborghini rose by 3.5 percent to almost 762,000 units. Engine production was up 4.5 percent to more than 1.3 million. As already mentioned, the figures for vehicle and engine production reached an all-time high.

The number of employees within the Audi Group was around 52,900 at the end of December, almost three percent up on the previous year. Over half of this increase is attributable to the newly consolidated companies.

Ladies and Gentlemen, this rounds off my overview of the past year. But before Herr Stadler moves on to AUDI AG’s financial statements, one final remark in connection with last year’s Annual General Meeting:

Following the last Annual General Meeting, the shareholder “Effecten Spiegel AG” challenged the resolution to grant discharge to the Supervisory Board, as well as the resolution to conclude intercompany agreements.

The District Court of Ingolstadt rejected the action to set aside the resolution in entirety and finally. We had all the intercompany agreements concerned entered on the Commercial Register before the end of the year, with the result that the originally intended effects were achieved in full.

Now over to you, Herr Stadler.

Part II

Ladies and Gentlemen,

In the second part of my report I would like to comment on the figures for the first four months of this year. I also intend to describe our current activities in the product, market and corporate areas.

AUDI AG has remained on its successful course in the first third of this year irrespective of all the difficulties that the market is experiencing, and has achieved new record-breaking revenue, profits, vehicle sales and production totals.

AUDI AG’s revenue grew by around seven percent during this period, and thus outstripped growth in vehicle sales. The reason for this increase is above all the trend towards more exclusive, correspondingly high-specification vehicles.

The pre-tax profit is likewise well up on the equivalent figure for 2003.

We were able to boost vehicle production within the Audi Group by around 8 percent. We built almost 270,000 vehicles by April 30 of this year.

Production output of engines rose by around 6 percent to over 500,000 units.

The personnel total for the Audi Group is roughly unchanged from the previous year. The employee total at the end of April was around 53,000.

Audi vehicle sales from January to April reached the highest total ever in the history of the company, at around 259,000. The rate of increase is around 4 percent. We posted record-breaking vehicle sales in a total of 23 markets, including 13 in Europe.

Our subsidiary Lamborghini has more than trebled its sales, thanks to the resounding success of the Gallardo. Lamborghini will be bringing further interesting new vehicles onto the market at the end of this year.

But back to Audi: we have been able to improve on our very good competitive position in our largest coherent market region, Europe. Vehicle sales are around three percent up on the previous year.

And the upward trend for Audi in Eastern Europe is continuing, as last year.

Just over a week ago, the Chinese Premier Wen Jiabao visited Audi.

This is undoubtedly a great honour for us, as the leading supplier of premium vehicles in China. It also serves as a clear endorsement of our China strategy to date:

On the one hand we are building the A4 and A6 locally in China – I might add to the same high standard of quality as in Germany – and on the other hand we are able to supply other attractive imported models such as the TT, allroad, A4 Cabriolet and above all the A8.

We have an exclusive Audi dealer network providing professional sales support and equally professional service in China’s major cities.

The vehicle sales total of more than 22,000 is currently around 28 percent up on the very high prior-year figure, so we have easily exceeded our own expectations. Businesspeople comprise the mainstay of demand for Audi cars in China, with the result that around three-quarters of buyers are private customers.

China is also the market to which we will supply the largest number of our new flagship model: the twelve-cylinder A8, which we have on display today, is the first model to feature the new Audi front end, which we will be gradually introducing on all our vehicles.

This exceptionally luxurious and extremely dynamic saloon is of considerable significance to Audi in multiple respects:

As well as the twelve-cylinder version, a further very interesting engine has been available in the A8 since mid-March: the new three-litre TDI developing 233 bhp, which will lend further momentum to sales of the A8.

The A8 is already the most successful eight-cylinder luxury saloon in Europe.

Just over three weeks ago, we kicked off the market launch of the new A6 saloon: it introduces an utterly new level of design, dynamism and sophistication to the intensely competitive segment of so-called business saloons.

It is particularly important to our customers that many of the successful features that we have introduced into the luxury class will now be available in the full-size class in the new A6.

This car will also emphasise its positioning as “the most sporty business saloon” by its road performance.

In one of the most important tests, the A6 received the maxiumum score of five stars. At the moment, we have around 20,000 customer orders. That is satisfyingly beyond our expectations.

By the end of December, we aim to have produced between 85,000 and 90,000 A6 saloons in Neckarsulm. The A6 will therefore also contribute to the success of Audi this year.

The resounding success of our sporty top model, the RS 6, has inspired our quattro GmbH subsidiary to build a strictly limited edition of the tuned RS 6 plus – which has 480 horsepower engine. Its road performance is unequalled by any competitor: a mere 4.6 seconds elapse when sprinting from 0 to 100 km/h, and it reaches 200 km/h in just 17.3 seconds. We have already sold around 7,800 of the saloon and Avant versions of the RS 6 – when we had actually only planned on selling 4,900. We will supply the RS 6 plus to 999 customers. Or to be more precise, 998 – because we intend to keep the very last of this series for our own collection. We have already sold over half of this total.

Ladies and Gentlemen,

Earlier on I mentioned the significance of the new A3 for our company’s success in 2003. Early this autumn, we will be bringing a very interesting variant of the A3 onto the market.

The A3 Sportback. With this new body version, we are aiming to take the success of the first A3 generation significantly further. This A3, in common with our twelve-cylinder engine and the A6, will sport our new front-end design.

It differs from the previous five-door A3 in that it has an entirely independent concept: rather than simply being a three-door model with two extra doors, it is a compact car with a clear sport and design emphasis that targets younger, lifestyle-oriented customers in particular.

The Sportback comes in response to our customers’ desire for greater differentiation, more evocative design and more agility.

We will be venturing into further important market segments with new vehicles in the next few years, to acquire an even broader and more engaging appeal: over approximately the next three years alone, we will be premièring six vehicle concepts that further consolidate and strengthen our market position. And, in best Audi tradition, three of these six new products will bear a strong resemblance to concept studies that we have recently unveiled.

The Sportback that I have just mentioned, like the three-door A3, will be built at Ingolstadt. Other production locations were also considered, but the infrastructure, the standard of qualifications of the workforce and the cost structure tipped the balance in Ingolstadt’s favour. For us at Audi, this signals a clear commitment to Germany as a production base.

Over the past ten years alone, Audi has created around 12,000 new jobs at Neckarsulm and Ingolstadt. Audi is regarded as one of the most attractive employers in the country.

This undoubtedly has much to do with the fascinating products that we develop and build – but the innovativeness and versatility of our company also count for something.

We introduced a new model to boost our training capacity in 2000. Today, we are able to train around 40 percent more young people per yearly intake as skilled workers.

At the moment we train around 2,000 young people and take them on as employees. We have even launched a scheme to give the young unemployed some specific training – an initiative that has produced very good results.

I believe that the motivation of our workforce is a key reason for our enduring success. Or, put differently, the people who work at Audi are wholeheartedly dedicated to the Audi cause.

This motivation is possibly also reflected by the fact that we are the best in Germany at internal ideas management: we not only have the highest ratio of skilled workers in the German car industry, but also the most imaginative employees.

Dear Shareholders,

By way of conclusion, allow me to sum up again:

Thank you very much for your attention.