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Risks from investments

Using acquisitions and investments to increase the value added for the corporation and improve its market position is part of our corporate strategy. This results in a risk from investments that we attempt to reduce in advance by conducting in-depth due diligence. All acquisitions and investments are analyzed for their strategic relevance and earnings power. However, in the wake of what in some cases has been a dramatic worsening of the underlying conditions for the automotive industry, at the end of the year it was necessary to test goodwill for impairment, primarily as a result of the takeover of Siemens VDO activities in December 2007. Customer relationships, which are listed in the balance sheet as intangible assets, likewise underwent impairment testing. As a result, there was a non-cash impairment charge which is described in more detail on pages 124 and 125 of the annual report 2008. In the event of a prolonged negative development of the vehicle markets, further impairment of goodwill and customer relationships cannot be ruled out.