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Dealer Network Buzz.

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1. 2013 Highlights

2. Facilities:

The Modular Concept - Completed Sites The Modular Concept:Breaking Ground In progress

3. People:

Profiling Recent Dealer Principal Appointments & Induction 2014Dealer Principal Apprentice Programme – Graduation Ceremony

4. Other Information:

BBBEE Codes of Good PracticeDealership Upgrade Process Business Management UpdateAnnual Dealer Network Management Forum 2014Brand Feature: Golf R

Contents. 2013 Highlights.

• 2013 Dealer Network Forum

• 27 Modular Concept Sites completed

• 12 Sites In progress with a 2014 Target Completion

• 7 new Dealer Principals appointed in 2013

• Dealer Principal Apprentice Programme - 3 of 5 candidates appointed as Dealer Principals

• 2.56% - 2013 Profitability

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Facilities.The Modular Concept Rollout.

Facilities. The Modular Concept Rollout.Since its inception, 27 modular concept projects have been completed. These new developments make a bold and proud Volkswagen brand statement.

Projects completed in 2013: (featured in previous mailer) • Hatfield Pretoria • McCarthy Middelburg• Barons Pietermaritzburg

In this mailer: • NTT East London• NTT Heidelberg• Barons Bruma• Barons Bellville • Dirk Ellis Volkswagen – Jeffreys Bay • Midbay Motors – Richards Bay• Hatfield Bryanston• King William’s Town • Tavcor Commercial PE

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NTT East London.

NTT East London completed their brand new facility in March 2013 – an integrated Volkswagen passenger and Volkswagen Commercial Vehicles dealership well situated on main arterials in East London. This is most certainly a flagship dealership for the Volkswagen Brand and for East London.

NTT Heidelberg.

This relocated dealership is a shining example of the new Volkswagen Modular Concept.

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Barons Bruma.

The Barons Bruma dealership was completed in November 2013. The upgrade required a full redesign to maximise space utilisation and improve customer flow. Congratulations to Venerson and his team on the new facility.

Barons Bellville.A full upgrade of the existing premises was completed in December 2013. This provided an opportunity for our architects to redesign the space in order to maximise exposure and improve the retail customer experience. Well done Bellville.

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Dirk Ellis - Jeffrey’s Bay.

Dirk Ellis, previously in Humansdorp has found a new home in Jeffreys Bay. The dealership in Humansdorp was built in 1984 and established a strong presence in the area. In 2011, the Kelston Group identified a prime site in Jeffreys Bay. Construction of the greenfields dealership began in January 2013 and was completed in record time for the official opening in October 2013.

Dirk Ellis - Jeffrey’s Bay Opening.

From left to right: Jacques Herselmann - Dealer Principal, David Powels – Managing Director Volkswagen Group South Africa, Petra Hoffmann - Volkswagen Sales & Marketing Director, Dirk Ellis, Mike McNaugton and Simphiwe Nghona – Kelston Group Directors. Congratulations to the Kelston Group.

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Midbay Motors - Richards Bay.

Building construction started in 2012 and was completed in October 2013. This spectacular greenfields dealership is situated in a prime area in Richards Bay and has the locals buzzing.

Midbay Motors - Richards Bay Interior.

Midbay Motors stunning interior complements the exterior and attracts customers.

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Hatfield Bryanston.

Situated in the heart of Sandton, Hatfield Bryanston’s facility exudes state–of–the–art architecture and is a Volkswagen brand statement. Bryanston is a perfect example of how the Piazza concept can be elegantly converted into the Modular Concept.

Hatfield Bryanston Interior. Cheryl Claassen – Dealer Principal of Hatfield Bryanston had this to say:

“The new facility has uplifted the mood and tone of the staff, and in our first full month of operating from our new facility, we had a record month in January! Our clients have commented that the look and feel of this facility is so inviting and welcoming that they just come in to say hello and have a coffee.”

Congratulations to Cheryl and the team.

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NTT King William’s Town.

NTT King William’s Town is Volkswagen’s first Modular Concept to be implemented at a satellite facility. It is linked to NTT East London and makes use of synergies with this metro dealership. This is a good example of effective build cost utilization, which is essential in rural areas. The dealership is also well located in King William’s Town’s main road, which serves the local community.

The Modular Concept.Satellite.

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Tavcor Commercial PE. After relocating the Passenger dealership to the greenfields facility on William Moffett, Tavcor Group relocated its Commercial Vehicles operation to the upgraded facility on Mount Road.Well done Tavcor.

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The Modular Concept.Breaking Ground. Palm Motors - White River.

This Option 2 upgrade commenced in late 2013 and will be completed in March 2014. The attractive interior is already inviting customers.

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Lindsay Saker Bloemfontein.

Lindsay Saker Bloemfontein commenced their new mega greenfields dealership in 2013 and are due to complete the building in March 2014. This dealership is set to be the biggest Modular Concept development to date. Well done Bloemfontein.

Unitrans Commercial.

The Unitrans Commercial dealership started their upgrade at the end of October 2013. We look forward to seeing the complete site in mid 2014.

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Drawing plans.2014 Modular Concept.

The Modular Concept.In progress.

9 projects are underway and will soon break ground. 2014 looks to be a busy year as more projects look set to commence by mid 2014. Below are the 2014 fresh starters.

We commend the dealerships that have made this commitment. Watch the space as facilities transformation is set in motion.

Greenfields - New premises Upgrade of existing premises

Lindsay Saker – Vereeniging Unitrans – Strijdom Park

Travcor – George Mosselbay

Alan Hudson – Nelspruit McCarthy Durban

McCarthy Parow

McCarthy Wonderboom

Westvaal VW Lichtenburg

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People. Ashley Gengiah

Lindsay Saker

Airport

Simphiwe Nghona

Market Square

Uitenhage

Xolani Mkhwanazi

McCarthy Constantia

Ashley GengiahLindsay Saker Airport

Ashley Gengiah

Lindsay Saker

Airport

Simphiwe Nghona

Market Square

Uitenhage

Xolani Mkhwanazi

McCarthy Constantia

Simphiwe Nghona Market Square Uitenhage

Dealer Principals & Inductions 2014.Most Recent Appointments:

Ashley, Simphiwe and Xolani were appointed in the last quarter of 2013 as Dealer Principals for the Volkswagen brand.

“Just a short thank you for all the effort that went into the DP induction day and dinner meeting. I can assure you that the preparedness of the VW delegation did not go unnoticed. I found the day very informative and feel that I have a far better understanding of the vision for the brand and the Volkswagen Group. I can truly say that I feel I have returned to the VW family after a number of years in the wilderness.”- David Schady from Knysna at 2013 Dealer Induction.

Dates to be communicated to the respective Dealer Principals by mid 2014.

Ashley Gengiah

Lindsay Saker

Airport

Simphiwe Nghona

Market Square

Uitenhage

Xolani Mkhwanazi

McCarthy Constantia

Xolani MkhwanaziMcCarthy Constantia

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The first five candidates of the Volkswagen Group South Africa’s pilot Dealer Principal Apprentice Programme were honoured on the 30th of January 2014 at a graduation event held at La Campagnola in Bryanston. The function was attended by Ms Nonkqubela Maliza, Director of Corporate and Government Affairs, Ms Petra Hoffmann, Director of Sales and Marketing, and representatives of McCarthy, Lindsay Saker and Volkswagen Group South Africa.

The graduation was a 30-month programme for Ashley Gengiah, Bilal Bhoja, Marcia Mayaba, Xolani Mkhwanazi and Smitha Odhav. Marcia, Xolani and Ashley now occupy Dealer Principal positions.

“It’s hard to believe that almost four years ago to the day, our team was challenged by the Board of Management to devise a strategy to develop a talent pool of black dealer principals. We identified a service partner in Optima, did some benchmarking and put together a programme that resembled a mini MBA.” - Haley Botha commenting on the significance of event.

“The DPAP was borne out of VWSA’s commitment to meaningful and sustainable transformation. VWSA’s aim is to increase the number of black dealer principals in the dealer network and ensure that they are adequately equipped and prepared for their responsibilities.”- Ms Maliza.

Congratulations to the DPAP team and continue to fly the flag high.

Dealer Principal Apprentice Programme.Graduation Ceremony

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Information.

BBBEE New Codes of Good Practice.

Fully aware of the revised codes of good practice issued and its significant impact, we have invited an industry expert to this year’s annual dealer network forum to present the revised codes and share some insights. Please feel free to participate in the discussion and pose questions, as it is your forum.

The 2014 forum dates are communicated on page 34 of this mailer.

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Dealership Upgrade Process.

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Dealership Upgrade Process Continued.Dealership Upgrade Process Continued.

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Business Management Update.

VW Dealer Profitability - December 2013 MTD.

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VW Dealer Profitability - December 2013 YTD. Summary of 2013 Performance.

• Full Year PBT result for 2013 marginally down to 2.56% vs. 2.84% achieved in 2012.

• December 2013 PBT results were influenced by the number of trading days, which impacted the Workshop and Parts departments.

• Year-on-year, the growth in overall dealership expenses contributed to the slight downturn in profitability. We urge all dealers to actively manage this area of your business – identify wastage vs. must-haves. Further review all contractual obligations where possible, i.e. telephone management systems, etc., to optimise on all services received.

• Should you require any assistance with the above, or would like a review of your dealership’s performance, please do not hesitate to contact the Business Management department on 011 911 2700. We have a variety of tools that can assist you in optimising your business.

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Annual Dealer Network Management Forum.

We are finalising the planning for our next annual Dealer Network Management Forum, which will take place during the first half of April 2013. Last year’s attendance was encouraging and we look forward to your attendance and participation this year.

This year’s highlights includes 2 guest speakers on topics such as:1. RCOG (Revised Codes of Good Practice) 2. Dealer operational challenges and maximising profitability

Please see below for the itinerary (subject to change) – venues to be confirmed at a later stage.

Roadshow Dates:01 April 2014 – Durban

02 April 2014 – Port Elizabeth

04 April 2014 – Johannesburg

07 April 2014 – Cape Town

09 April 2014 – Polokwane

11 April 2014 – Bloemfontien

Annual Dealer Network Management Forum 2014.

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New Golf R. It’s R-rated.

Brand Feature.Golf R.

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Featuring a blazing 206kW power output and an earth shattering torque figure of 380Nm, all harnessed by a 4Motion all-wheel drive system featuring the latest Haldex technology, the New Golf R is certainly in a class of its own and worthy of an out of this world launch campaign.

Heart thumping and blood pumping, the ultimate expression of performance has arrived.

The New Golf R is here, and hotter than ever.Untamed. Unchained. Unleashed. With explicit performance and physics defying driving dynamics in never before seen levels of premium luxury and quality in the segment, the New Golf R is certain to shake up everything you thought you knew about the high performance hot hatch.

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All the best for the year ahead, till next time!