Audi 2007 Annual Report Download - page 169

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There have been no substantial changes in the Audi Group’s risk position by comparison
with the year before.
The risks described harbor the potential to significantly undermine the Audi Group’s fi-
nancial position and financial performance. On the basis of all known facts and circum-
stances, however, no risks currently exist that could endanger the Company’s survival in the
foreseeable future.
Report on expected developments
General economic situation
The Audi Group believes that the global economy will slow down in 2008, following multiple
periods of strong growth. The principal determining factor here is the prospect of a rapid
slowdown in the U.S. economy, outweighing robust economic growth in numerous develop-
ing and emerging countries. The sustained high level of crude oil and raw materials prices
will also have a dampening effect.
In the United States, the continuing crisis in the real estate market will put a damper on
consumer spending. This will go hand in hand with increasingly restrictive lending practices
on the part of the banks, resulting in reduced private-sector investment activity. Economic
growth for the year as a whole is therefore expected to weaken even further.
In the euro zone, the economy will cool down somewhat in 2008, but the stable upward
trend will be sustained. The Audi Group expects to see a further decline in economic growth
in Germany. The dynamism of exports and capital expenditures will probably ease off. On
the other hand, however, consumer spending is likely to be stronger and make a larger con-
tribution to economic growth than in 2007, not least due to the continued upward trend of
employment, coupled with higher collective-bargaining settlements and lower inflation than
the year before.
The rate of economic expansion will remain high in many countries throughout Latin
America as well as Central and Eastern Europe. Most notably in Russia, the rapid upward
trend will continue thanks to the strong exports of the country’s energy producers.
The Chinese economy will be dampened somewhat in 2008 as a result of the weakening
of the U.S. economy and the corresponding downturn in exports to the U.S. Its economic
dynamism will, however, remain at a high level, with GDP growth likely to remain in the
double-digit range. Continued vigorous economic expansion is expected in India. The Japa-
nese economy will again expand at only a very modest rate in 2008.
The car industry
The Audi Group anticipates a renewed increase in global demand for automobiles of over
2 percent in 2008 to around 60 million passenger cars. Principal growth hotspots will be the
emerging markets of China, India and Russia.
The general market environment will remain difficult in Germany. The forecast rise in
consumer spending will induce only a slight improvement in sales figures. The Audi Group
expects to see an increase in the volume of new registrations in the German market of just
under 2 percent to around 3.2 million passenger cars.
The Audi Group expects registrations of new cars in Western Europe (excluding Germany)
to decline to 11.4 million vehicles. Dwindling sales figures in Italy will be the main factor at
work here.
In the countries of Central and Eastern Europe, on the other hand, the market will remain
dynamic, although the growth rate will be down slightly from the previous year. The Audi
Group is forecasting growth of over 9 percent for the Russian automobile market to nearly
2.6 million passenger cars.
Overall assessment of the
risk position
A
nticipated development of
the economic environment