Additional Balance Sheet Disclosures in accordance with IFRS 7 (Financial Instruments)

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CARRYING AMOUNT OF FINANCIAL INSTRUMENTS BY MEASUREMENT CATEGORY UNDER IAS 39
€ million		Dec. 31, 2012		Dec. 31, 2011
* Prior-period figures adjusted because of the updated purchase price allocation for MAN.
Financial assets at fair value through profit or loss		556		9,096
Loans and receivables		102,451		92,163
Available-for-sale financial assets		11,306		9,197
Financial liabilities at fair value through profit or loss		607		1,026
Financial liabilities measured at amortized cost*		138,506		112,975

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS

The following table shows the reconciliation of the balance sheet items to the relevant classes of financial instruments, broken down by carrying amount and fair value of the financial instruments.

The fair value of financial instruments measured at amortized cost, such as receivables and liabilities, is calculated by discounting using a market rate of interest for a similar risk and matching maturity. For reasons of materiality, the fair value of current balance sheet items is deemed to be their carrying amount.

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RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2011
		Measured at fair value		Measured at amortized cost				Not within scope of IFRS 7		Balance sheet item at Dec. 31, 2011
€ million		Carrying amount		Carrying amount		Fair value		Carrying amount
* Prior-period figures adjusted because of the updated purchase price allocation for MAN.
Noncurrent assets
Equity-accounted investments		–		–		–		10,249		10,249
Other equity investments		2,033		1,015		1,015		–		3,049
Financial services receivables		–		42,450		43,735		–		42,450
Other financial assets		9,737		3,085		3,116		–		12,823
Current assets
Trade receivables		–		10,479		10,479		–		10,479
Financial services receivables		–		33,754		33,754		–		33,754
Other financial assets		789		3,464		3,464		–		4,253
Marketable securities		6,146		–		–		–		6,146
Cash, cash equivalents and time deposits		–		18,291		18,291		–		18,291
Noncurrent liabilities
Noncurrent financial liabilities*		–		44,442		45,572		–		44,442
Other noncurrent financial liabilities		2,247		299		298		–		2,547
Current liabilities
Current financial liabilities		–		49,090		49,090		–		49,090
Trade payables		–		16,325		16,325		–		16,325
Other current financial liabilities		1,727		3,161		3,161		–		4,888

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RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2012
		Measured at fair value		Measured at amortized cost				Not within scope of IFRS 7		Balance sheet item at Dec. 31, 2012
€ million		Carrying amount		Carrying amount		Fair value		Carrying amount
Noncurrent assets
Equity-accounted investments		–		–		–		7,309		7,309
Other equity investments		2,606		1,265		1,265		–		3,870
Financial services receivables		–		49,785		50,491		–		49,785
Other financial assets		2,226		4,206		4,279		–		6,431
Current assets
Trade receivables		–		10,099		10,099		–		10,099
Financial services receivables		–		36,911		36,911		–		36,911
Other financial assets		832		5,041		5,041		–		5,872
Marketable securities		7,433		–		–		–		7,433
Cash, cash equivalents and time deposits		–		18,488		18,488		–		18,488
Noncurrent liabilities
Noncurrent financial liabilities		–		63,603		66,183		–		63,603
Other noncurrent financial liabilities		1,587		810		816		–		2,397
Current liabilities
Current financial liabilities		–		54,060		54,060		–		54,060
Trade payables		–		17,268		17,268		–		17,268
Other current financial liabilities		1,230		3,195		3,195		–		4,425

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BALANCE SHEET ITEMS MEASURED AT FAIR VALUE
€ million		Dec. 31, 2011		Level 1		Level 2		Level 3
Financial assets at fair value through profit or loss
Derivatives		10,526		–		1,942		8,584
Available-for-sale financial assets
Other equity investments		2,033		2,033		–		–
Marketable securities		6,146		6,122		24		–
Financial assets measured at fair value		18,706		8,156		1,966		8,584
Financial liabilities at fair value through profit or loss
Derivatives		3,974		–		3,379		595
Financial liabilities measured at fair value		3,974		–		3,379		595

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BALANCE SHEET ITEMS MEASURED AT FAIR VALUE
€ million		Dec. 31, 2012		Level 1		Level 2		Level 3
Financial assets at fair value through profit or loss
Derivatives		3,057		–		2,939		119
Available-for-sale financial assets
Other equity investments		2,606		2,606		–		–
Marketable securities		7,433		7,419		14		–
Financial assets measured at fair value		13,096		10,025		2,953		119
Financial liabilities at fair value through profit or loss
Derivatives		2,818		–		2,757		60
Financial liabilities measured at fair value		2,818		–		2,757		60

The allocation of fair values to the three levels in the fair value hierarchy is based on the availability of observable market prices in an active market. Level 1 is used to report the fair value of financial instruments for which a quoted price is available. Examples include marketable securities and other equity investments measured at fair value. Fair values in Level 2, e.g. of derivatives, are measured on the basis of market inputs such as exchange rates or yield curves using market-based valuation techniques. Level 3 fair values are calculated using valuation techniques that incorporate inputs that are not directly observable in active markets. In the Volkswagen Group, Level 3 fair values comprise long-term commodity futures because the prices available on the market must be extrapolated for measurement purposes. Options on equity instruments and residual value protection models are also reported in Level 3. This mainly relates to the options on the outstanding shares of Porsche Holding Stuttgart until July 31, 2012.

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CHANGES IN BALANCE SHEET ITEMS MEASURED AT FAIR VALUE BASED ON LEVEL 3
€ million		Financial assets measured at fair value		Financial liabilities measured at fair value
Balance at Jan. 1, 2011		2,118		396
Foreign exchange differences		0		0
Total comprehensive income		6,565		–298
recognized in profit or loss		6,541		–216
recognized in other comprehensive income		23		–81
Additions (purchases)		–		–
Sales and settlements		–		83
Transfers into Level 2		–98		–15
Balance at Dec. 31, 2011		8,584		595
Total gains or losses recognized in profit or loss		6,541		–216
Net other operating expense/income		90		–116
of which attributable to assets/liabilities held at the reporting date		90		–116
Financial result		6,452		–100
of which attributable to assets/liabilities held at the reporting date		6,414		17

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CHANGES IN BALANCE SHEET ITEMS MEASURED AT FAIR VALUE BASED ON LEVEL 3
€ million		Financial assets measured at fair value		Financial liabilities measured at fair value
Balance at Jan. 1, 2012		8,584		595
Foreign exchange differences		0		0
Total comprehensive income		1,784		486
recognized in profit or loss		1,785		423
recognized in other comprehensive income		–1		63
Additions (purchases)		–		–
Sales and settlements		–10,199		21
Transfers into Level 2		–51		–28
Balance at Dec. 31, 2012		119		60
Total gains or losses recognized in profit or loss		1,785		423
Net other operating expense/income		9		–3
of which attributable to assets/liabilities held at the reporting date		–13		24
Financial result		1,776		426
of which attributable to assets/liabilities held at the reporting date		3		–228

The transfers out of Level 3 into Level 2 comprise commodity futures for which observable quoted prices are now available again for measurement purposes due to the decline in their remaining maturities; consequently, no extrapolation is required.

Commodity prices are the key risk variable for the fair value of commodity futures. Sensitivity analyses are used to present the effect of changes in commodity prices on profit after tax and equity.

If commodity prices for commodity futures classified as Level 3 had been 10% higher (lower) as of December 31, 2012, profit would have been €4 million (previous year: €34 million) higher (lower) and equity would have been €18 million (previous year: €38 million) higher (lower).

The key risk variable for measuring options on equity instruments held by the Company is the relevant enterprise value. Sensitivity analyses are used to present the effect of changes in risk variables on profit.

If the assumed enterprise values had been 10% higher, profit would have been €14 million (previous year: €1,322 million) higher. If the assumed enterprise values had been 10% lower, profit would have been €25 million (previous year: €1,324 million) lower.

Residual value risks result from hedging agreements with dealers under which earnings effects caused by market-related fluctuations in residual values that arise from buy-back obligations under leases are borne in part by the Volkswagen Group.

The key risk variable influencing the fair value of the options relating to residual value risks is used car prices. Sensitivity analyses are used to quantify the effects of changes in used car prices on earnings after tax.

If the prices for the used cars covered by the residual value protection model had been 10% higher as of December 31, 2012, profit after tax would have been €162 million higher. If the prices for the used cars covered by the residual value protection model had been 10% lower as of December 31, 2012, profit after tax would have been €162 million lower.

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CHANGES IN CREDIT RISK VALUATION ALLOWANCES ON FINANCIAL ASSETS
€ million		Specific valuation allowances		Portfolio-based valuation allowances		2012		Specific valuation allowances		Portfolio-based valuation allowances		2011
Balance at Jan. 1		1,983		1,050		3,033		1,951		685		2,636
Exchange rate and other changes		–20		–13		–34		–24		–6		–31
Changes in consolidated Group		46		13		59		38		19		57
Additions		901		383		1,284		834		484		1,318
Utilization		399		–		399		382		–		382
Reversals		416		203		619		442		124		566
Reclassification		–23		23		0		8		–8		–
Balance at Dec. 31		2,072		1,253		3,325		1,983		1,050		3,033

The valuation allowances mainly relate to the credit risks associated with the financial services business.

The receivables from customer financing and trade receivables include transferred receivables in the total amount of €570 million and €8 million respectively that were not derecognized in their entirety because the credit risk remains with the Volkswagen Group. The total purchase price received of €553 million and €8 million, respectively, is reported in financial liabilities. The fair values of the receivables and liabilities are not materially different to their carrying amounts.