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Volkswagen Auto Lease/Loan Underwritten Funding, LLC, et al. – ‘424B5’ on 10/20/14

On:  Monday, 10/20/14, at 11:32am ET   ·   Accession #:  1193125-14-375918   ·   File #s:  333-185282, -07

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/20/14  Volkswagen Auto Lease/Loan U… LLC 424B5                  1:2.0M                                   RR Donnelley/FA
          Volkswagen Auto Loan Enhanced Trust 2014-2

Document/Exhibit                   Description                      Pages   Size 

 1: 424B5       Prospectus                                          HTML   1.42M 

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PROSPECTUS SUPPLEMENT

(To Prospectus Dated October 9, 2014)

$1,000,000,000

Volkswagen Auto Loan Enhanced Trust 2014-2

Issuing Entity

Volkswagen Auto Lease/Loan Underwritten Funding, LLC

Depositor

VW Credit, Inc.

Sponsor, Originator and Servicer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these notes or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Joint Bookrunners

The date of this prospectus supplement is October 15, 2014

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WHERE TO FIND INFORMATION IN THIS PROSPECTUS

SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS

This prospectus supplement and the accompanying prospectus provide information about the issuing entity and the notes offered by this prospectus supplement and the accompanying prospectus.

We tell you about the notes in two separate documents:

You should rely only on the information contained in, or expressly incorporated by reference into, this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with other or different information. If you receive any other information, you should not rely on it. We are not offering the notes in any jurisdiction where the offer is not permitted. We do not claim that the information in this prospectus supplement and the accompanying prospectus is accurate on any date other than the dates stated on their respective covers.

We have started with two introductory sections in this prospectus supplement describing the notes and the issuing entity in abbreviated form, followed by a more complete description of the terms of the offering of the notes. The introductory sections are:

We include cross-references in this prospectus supplement and in the accompanying prospectus to captions in these materials where you can find additional related information. You can find the page numbers on which these captions are located under the Table of Contents in this prospectus supplement and the Table of Contents in the accompanying prospectus. You can also find a listing of the pages where the principal terms are defined under “Index of Principal Terms” beginning on page I-1 of this prospectus supplement and page I-1 of the accompanying prospectus.

Wherever information in this prospectus supplement is more specific than the information in the accompanying prospectus, you should rely on the information in this prospectus supplement.

If you have received a copy of this prospectus supplement and accompanying prospectus in electronic format, and if the legal prospectus delivery period has not expired, you may obtain at no cost a paper copy of this prospectus supplement and accompanying prospectus from the depositor or from the underwriters.

In this prospectus supplement, the terms “we”, “us” and “our” refer to Volkswagen Auto Lease/Loan Underwritten Funding, LLC.

REPORTS TO NOTEHOLDERS

After the notes are issued, unaudited monthly servicing reports containing information concerning the issuing entity, the notes and the receivables will be prepared by VW Credit, Inc. (“VW Credit”) and sent on behalf of the issuing entity to the indenture trustee, who will forward the same to Cede & Co. See the accompanying prospectus under “Reports to Securityholders”.

Owners of the notes may receive the reports by submitting a written request to the indenture trustee. In the written request you must state that you are an owner of notes and you must include payment for expenses associated with the distribution of the reports. The indenture trustee will also make such reports (and, at its option, any additional files containing the same information in an alternative format) available to noteholders each month via its

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Internet website, which is presently located at https://tss.sfs.db.com/investpublic/. The indenture trustee will forward a hard copy of the reports to each noteholder promptly after it becomes aware that the reports are not accessible on its Internet website. Assistance in using this Internet website may be obtained by calling the indenture trustee’s customer service desk at (800) 735-7777. The indenture trustee is obligated to notify the noteholders in writing of any changes in the address or means of access to the Internet website where the reports are accessible.

The reports do not constitute financial statements prepared in accordance with generally accepted accounting principles. VW Credit, the depositor and the issuing entity do not intend to send any of their financial reports to the beneficial owners of the notes. The issuing entity will file with the Securities and Exchange Commission (the “SEC”) all required annual reports on Form 10-K, distribution reports on Form 10-D and current reports on Form 8-K. Those reports will be filed with the SEC under the name “Volkswagen Auto Loan Enhanced Trust 2014-2” and file number 333-185282-07.

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS MAY ONLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED IN THE UNITED KINGDOM TO PERSONS AUTHORIZED TO CARRY ON A REGULATED ACTIVITY (“AUTHORIZED PERSONS”) UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 OF THE UNITED KINGDOM, AS AMENDED (“FSMA”) OR TO PERSONS OTHERWISE HAVING PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND QUALIFYING AS INVESTMENT PROFESSIONALS UNDER ARTICLE 19 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (“ORDER”), OR TO PERSONS WHO FALL WITHIN ARTICLE 49(2)(A) TO (D) (AS HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER OR TO ANY OTHER PERSON TO WHOM THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS MAY OTHERWISE LAWFULLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED.

NONE OF THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS OR THE NOTES ARE OR WILL BE AVAILABLE TO OTHER CATEGORIES OF PERSONS IN THE UNITED KINGDOM AND NO ONE FALLING OUTSIDE SUCH CATEGORIES IS ENTITLED TO RELY ON, AND THEY MUST NOT ACT ON, ANY INFORMATION IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. THE COMMUNICATION OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS TO ANY PERSON IN THE UNITED KINGDOM OTHER THAN PERSONS IN THE CATEGORIES STATED ABOVE IS UNAUTHORIZED AND MAY CONTRAVENE THE FSMA.

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS HAVE BEEN PREPARED ON THE BASIS THAT ANY OFFERS OF NOTES IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE, EACH A “RELEVANT MEMBER STATE”, WILL BE MADE PURSUANT TO AN EXEMPTION UNDER THE PROSPECTUS DIRECTIVE, AS IMPLEMENTED IN THE RELEVANT MEMBER STATE, FROM THE REQUIREMENT TO PUBLISH A PROSPECTUS FOR OFFERS OF NOTES. ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN A RELEVANT MEMBER STATE OF NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS MAY ONLY DO SO IN CIRCUMSTANCES IN WHICH NO OBLIGATION ARISES FOR THE ISSUING ENTITY, THE DEPOSITOR OR THE UNDERWRITERS TO PUBLISH A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE OR SUPPLEMENT A PROSPECTUS PURSUANT TO ARTICLE 16 OF THE PROSPECTUS DIRECTIVE, IN EACH CASE, IN RELATION TO SUCH OFFER. NONE OF THE ISSUING ENTITY, THE DEPOSITOR OR THE UNDERWRITERS HAS AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF NOTES. IN CIRCUMSTANCES IN WHICH AN OBLIGATION ARISES FOR THE ISSUING ENTITY, THE DEPOSITOR OR THE UNDERWRITERS TO PUBLISH OR SUPPLEMENT A PROSPECTUS FOR SUCH OFFER. THE EXPRESSION “PROSPECTUS DIRECTIVE” MEANS DIRECTIVE 2003/71/EC (AS AMENDED, INCLUDING BY DIRECTIVE 2010/73/EU), AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN THE RELEVANT MEMBER STATE.

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SUMMARY OF STRUCTURE AND FLOW OF FUNDS

This structural summary briefly describes certain major structural components, the relationship among the parties, the flow of funds and certain other material features of the transaction. This structural summary does not contain all of the information that you need to consider in making your investment decision. You should carefully read this entire prospectus supplement and the accompanying prospectus to understand all the terms of this offering.

Structural Diagram

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Flow of Funds¹

(Prior to an Acceleration after an Event of Default)

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SUMMARY OF TERMS

This summary highlights selected information from this prospectus supplement and the accompanying prospectus and does not contain all of the information that you need to consider in making your investment decision. This summary provides an overview of certain information to aid your understanding. You should carefully read this entire prospectus supplement and the accompanying prospectus to understand all of the terms of the offering.

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RISK FACTORS

An investment in the notes involves significant risks. Before you decide to invest, we recommend that you carefully consider the following risk factors in addition to the risk factors beginning on page 1 of the accompanying prospectus.

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USE OF PROCEEDS

The depositor will use the net proceeds from the offering of the notes to:

The depositor or its affiliates will use the net proceeds of the offering of the notes for general purposes. The depositor and its affiliates will not use any of the offering proceeds to pay any “warehouse” debt secured by the receivables prior to their transfer to the issuing entity. Payment of any expenses incurred in connection with the selection and acquisition of the receivables will be made by the depositor or its affiliates directly, rather than out of offering proceeds.

THE ISSUING ENTITY

Limited Purpose and Limited Assets

Volkswagen Auto Loan Enhanced Trust 2014-2 is a statutory trust formed on September 22, 2014 under the laws of the State of Delaware by the depositor for the purpose of owning the receivables and issuing the notes. The issuing entity will be established and operated pursuant to a trust agreement. VW Credit will be the “administrator” of the issuing entity. An affiliate of the depositor will be the initial holder of the issuing entity’s certificate.

The issuing entity will engage in only the following activities:

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Capitalization of the Issuing Entity

The following table illustrates the expected capitalization of the issuing entity as of the cut-off date, as if the issuance of the notes had taken place on that date:

The issuing entity will also issue a certificate, which is not offered by this prospectus supplement, and initially will be held by an affiliate of the depositor. On each payment date, the holder of the certificate will be entitled to any funds remaining on that payment date after all deposits and distributions of higher priority, as described in “Description of the Transfer Agreements and Administration Agreement—Priority of Payments”.

The issuing entity’s fiscal year ends on December 31st.

The issuing entity’s trust agreement, including its permissible activities, may be amended in accordance with the procedures described in “Description of the Transfer Agreements and the Administration Agreement—Amendment Provisions” in this prospectus supplement.

The issuing entity’s principal offices are in New York, New York, in care of Citibank, N.A., as owner trustee, at the address listed in “The Trustees—The Owner Trustee” below.

For a description of the roles and responsibilities of the indenture trustee, see “Description of the Indenture” in the prospectus and “The Trustees” in this prospectus supplement.

The Issuing Entity Property

The notes will be collateralized by the issuing entity property. The primary assets of the issuing entity will be the receivables, which are amounts owed by individuals under motor vehicle retail installment sales contracts or installment loans with respect to new or used automobiles, minivans or sport utility vehicles originated by VW Credit. We refer to VW Credit as the “originator”.

The issuing entity property will consist of all the right, title and interest of the issuing entity in and to:

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The issuing entity will pledge the issuing entity property to the indenture trustee under the indenture.

THE TRUSTEES

The Owner Trustee

The “owner trustee” is Citibank, N.A., a national banking association and wholly owned subsidiary of Citigroup Inc., a Delaware corporation. Citibank, N.A. performs as owner trustee through the Agency and Trust line of business, a part of Issuer Services. Citibank, N.A. has primary corporate trust offices located in both New York and London. Citibank, N.A. is a leading provider of corporate trust services offering a full range of agency, fiduciary, tender and exchange, depositary and escrow services. As of the end of the third quarter of 2014, Citibank’s Agency and Trust group manages in excess of $5.2 trillion in fixed income and equity investments on behalf of over 2,500 corporations worldwide. Since 1987, Citibank Agency and Trust has provided corporate trust services for asset-backed securities containing pool assets consisting of airplane leases, auto loans and leases, boat loans, commercial loans, commodities, credit cards, durable goods, equipment leases, foreign securities, funding agreement backed note programs, truck loans, utilities, student loans and commercial and residential mortgages. As of the end of the third quarter of 2014, Citibank, N.A. acts as indenture trustee and/or paying agent for approximately 239 various asset backed trusts supported by either auto loans or leases or equipment loans or leases.

Citibank, N.A. (“Citibank”) is acting as owner trustee of this Volkswagen Auto Loan Enhanced Trust 2014-2 transaction. In the ordinary course of business, Citibank is involved in a number of legal proceedings. In connection with its role as trustee of certain residential mortgage backed securities (“RMBS”) transactions, Citibank has been named as a defendant in civil litigation. A group of investors in 48 private-label RMBS trusts for which Citibank serves or did serve as trustee filed a civil action on June 18, 2014 against Citibank in the Supreme Court of the State of New York asserting claims for alleged violations of the Trust Indenture Act of 1939, breach of contract, breach of fiduciary duty and negligence based on Citibank’s alleged failure to perform its duties as trustee for the RMBS trusts. Neither the above-disclosed litigation nor any other pending legal proceedings involving Citibank will materially affect Citibank’s ability to perform its duties as owner trustee under the trust agreement for this Volkswagen Auto Loan Enhanced Trust 2014-2 transaction. There can be no assurances as to the outcome of the litigation or the possible impact of the litigation on the trustee or the RMBS trusts. However, Citibank denies liability and intends to vigorously defend the litigation.

Other than the two paragraphs above, Citibank, N.A. has not participated in the preparation of any other information contained in the prospectus or the prospectus supplement.

The owner trustee’s liability in connection with the issuance and sale of the notes is limited solely to the express obligations of the owner trustee set forth in the trust agreement. Citibank, N.A. is not affiliated with VW Credit or any of its affiliates. VW Credit and its affiliates may maintain normal commercial banking or investment banking relations with the owner trustee and its affiliates. Citibank, N.A. and Citigroup Global Markets Inc., one of the underwriters, are affiliates. The servicer will be responsible for paying the owner trustee’s fees and for indemnifying the owner trustee against specified losses, liabilities or expenses incurred by the owner trustee in connection with the transaction documents. To the extent these fees and indemnification amounts are not paid by the servicer, they will be payable out of Available Funds as described in “Description of the Transfer Agreements and

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the Administration Agreement—Priority of Payments” and “—Priority of Payments May Change Upon an Event of Default” in this prospectus supplement.

For a description of the roles and responsibilities of the owner trustee, see “The Transaction Documents—The Owner Trustee and the Indenture Trustee” in the prospectus.

The Issuer Delaware Trustee

The “issuer Delaware trustee” is Citicorp Trust Delaware, National Association. Citicorp Trust Delaware, National Association is a federally chartered trust company under the supervision of The Office of the Comptroller of the Currency and is an affiliate of Citibank, N.A. Citicorp Trust Delaware, National Association’s principal place of business is located in Greenville, Delaware. Citicorp Trust Delaware, National Association acts as Delaware trustee for numerous Delaware statutory trusts. Citicorp Trust Delaware, National Association’s address is 20 Montchanin Road, Suite 180, Greenville, Delaware 19807.

Other than the paragraph above, Citicorp Trust Delaware, National Association has not participated in the preparation of any other information contained in the prospectus or the prospectus supplement.

The issuer Delaware trustee has been appointed solely for the purpose of complying with the requirement of the Delaware Statutory Trust Statute that the trust have one trustee, which, in the case of a natural person, is a resident of the State of Delaware, or which in all other cases, has its principal place of business in the State of Delaware. The duties and responsibilities of the issuer Delaware trustee shall be limited solely to the execution and delivery of all documents and certificates to form and maintain the existence of the trust under the Delaware Statutory Trust Statute. Except for the purpose of the foregoing sentence, the issuer Delaware trustee shall not be deemed a trustee and shall have no management responsibilities or owe any fiduciary duties to the issuing entity, the depositor or any beneficial owner.

Citicorp Trust Delaware, National Association is not affiliated with VW Credit or any of its affiliates. VW Credit and its affiliates may maintain normal commercial banking or investment banking relations with the issuer Delaware trustee and its affiliates. Citicorp Trust Delaware, National Association and Citigroup Global Markets Inc., one of the underwriters, are affiliates. The servicer will be responsible for paying the issuer Delaware trustee’s fees and for indemnifying the issuer Delaware trustee against specified losses, liabilities or expenses incurred by the issuer Delaware trustee in connection with the transaction documents. To the extent these fees and indemnification amounts are not paid by the servicer, they will be payable out of Available Funds as described in “Description of the Transfer Agreements and the Administration Agreement—Priority of Payments” and “Priority of Payments May Change Upon an Event of Default” in this prospectus supplement.

The Indenture Trustee

Deutsche Bank Trust Company Americas is the “indenture trustee” under the indenture. Deutsche Bank Trust Company Americas has acted as indenture trustee on numerous asset-backed securities transactions, including acting as indenture trustee on various auto loan and auto lease securitization transactions. While the structure of the transactions referred to in the preceding sentence may differ among these transactions, Deutsche Bank Trust Company Americas is experienced in administering transactions of this kind. Correspondence may be directed to the indenture trustee at its corporate trust office located at Deutsche Bank Trust Company Americas c/o Deutsche Bank National Trust Company–Institutional Cash Securities Services, 100 Plaza One, 6th Floor, MS JCY03-0699, Jersey City, New Jersey 07311-3901, Attn: Volkswagen Auto Loan Enhanced Trust 2014-2.

Deutsche Bank Trust Company Americas has been named as a defendant in civil litigation concerning its role as trustee of certain RMBS trusts. On June 18, 2014, a group of investors filed a civil action against Deutsche Bank Trust Company Americas and Deutsche Bank National Trust Company in New York State Supreme Court purportedly on behalf of and for the benefit of 544 private-label RMBS trusts asserting claims for alleged violations of the U.S. Trust Indenture Act of 1939, breach of contract, breach of fiduciary duty and negligence based on Deutsche Bank Trust Company Americas’s and Deutsche Bank National Trust Company’s alleged failure to perform their duties as trustees for the RMBS trusts. An amended complaint was filed on July 16, 2014, adding five

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plaintiffs and 15 RMBS trusts to the action. Deutsche Bank Trust Company Americas is reviewing these newly-filed pleadings.

The indenture trustee’s duties are limited to those duties specifically set forth in the indenture. Deutsche Bank Trust Company Americas is not affiliated with VW Credit or any of its affiliates. VW Credit and its affiliates may maintain normal commercial and investment banking relations with the indenture trustee and its affiliates. Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc., one of the underwriters, are affiliates. The servicer will be responsible for paying the indenture trustee’s fees and for indemnifying the indenture trustee against specified losses, liabilities or expenses incurred by the indenture trustee in connection with the transaction documents. To the extent these fees and indemnification amounts are not paid by the servicer, they will be payable out of Available Funds as described in “Description of the Transfer Agreements and the Administration Agreement—Priority of Payments” and “—Priority of Payments May Change Upon an Event of Default” in this prospectus supplement.

For a description of the roles and responsibilities of the indenture trustee, see “Description of the Indenture” and “The Transaction Documents—The Owner Trustee and the Indenture Trustee” in the prospectus and “Description of the Transfer Agreements and the Administration Agreement” in this prospectus supplement.

THE DEPOSITOR

The “depositor”, Volkswagen Auto Lease/Loan Underwritten Funding, LLC, a wholly owned special purpose subsidiary of VW Credit, was formed on August 9, 2002 as a Delaware limited liability company named Volkswagen Auto Lease Underwritten Funding, LLC. On December 15, 2006, Volkswagen Auto Lease Underwritten Funding, LLC changed its name to Volkswagen Auto Lease/Loan Underwritten Funding, LLC. The principal place of business of the depositor is at 2200 Ferdinand Porsche Drive, Herndon, Virginia 20171. You may also reach the depositor by telephone at (703) 364-7000. The depositor was formed to purchase, accept capital contributions of or otherwise acquire beneficial interests in portfolios of motor vehicle leases and the related leased vehicles, motor vehicle retail installment sale contracts and motor vehicle loans; to own, sell, and assign the receivables and to issue and sell one or more securities. Since its inception, the depositor has been engaged in these activities solely as (i) the purchaser of receivables and beneficial interests in vehicle lease portfolios from VW Credit pursuant to purchase agreements, (ii) the depositor of receivables and beneficial interests in vehicle loan portfolios to securitization trusts pursuant to sale and servicing agreements or sale agreements, (iii) the depositor that formed various securitization trusts pursuant to trust agreements and (iv) the entity that executes underwriting agreements and purchase agreements in connection with issuances of asset-backed securities.

THE SPONSOR

VW Credit was incorporated in the State of Delaware in April 1981 and is a wholly owned subsidiary of Volkswagen Group of America, Inc. (“Volkswagen Group of America”). Volkswagen Group of America is a wholly owned subsidiary of Volkswagen Aktiengesellschaft (“Volkswagen AG”). The principal activity of VW Credit is acting as a finance subsidiary of Volkswagen Group of America, including purchasing retail installment sales contracts, installment loans and leases from Volkswagen and Audi dealers. VW Credit offers and services a wide range of automobile-related financial products, including wholesale floorplan financing and retail auto loan and lease financing.

The principal place of business of VW Credit is at 2200 Ferdinand Porsche Drive, Herndon, Virginia 20171. You may also reach VW Credit by telephone at (703) 364-7000. VW Credit will act as the “servicer”.

VW Credit securitized its first portfolio of motor vehicle loans in 1988 and has recently sponsored motor vehicle loan securitizations in conjunction with public offerings of asset-backed securities in 2010, 2011, 2012, 2013 and 2014. VW Credit’s experience in and overall procedures for originating or acquiring receivables is described in “Origination and Servicing Procedures” in the accompanying prospectus. No public securitizations sponsored by VW Credit have defaulted or experienced an early amortization triggering event.

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VW Credit has participated in the structuring of the transaction described in this prospectus supplement and has originated receivables to be assigned to the issuing entity. VW Credit is responsible for servicing the receivables included in the receivables pool as described below. VW Credit is also the administrator of the issuing entity.

THE ORIGINATOR

VW Credit is responsible for originating the receivables included in the transaction described in this prospectus supplement.

The originator purchases retail installment sale contracts and installment loans, secured by automobiles or other motor vehicles, through dealerships throughout the United States. Additionally, VW Credit may utilize direct marketing to offer automobile financing directly to consumers. The originator’s direct marketed products may include financing for the purchase of new and used vehicles, as well as refinancing of existing motor vehicle loans. The originator customizes product features, such as interest rate, loan amount, and loan terms, enabling it to lend to customers with a wide range of credit profiles.

THE SERVICER

VW Credit will be the servicer. VW Credit offers indirect automotive consumer loan and lease financing and direct dealer financing through (and to) approximately 910 dealers in the United States that sell Volkswagen and/or Audi vehicles. VW Credit has been directly servicing motor vehicle receivables since 1996. Prior to 1996, receivables originated by VW Credit were serviced through a third party servicer. VW Credit’s auto loan asset-backed securitization program was first used in a term securitization in 1988. After the 1988 term securitization, VW Credit began securitizing auto loans again in 2003.

So long as VW Credit is the servicer, it will also act as custodian of the receivables and will maintain possession of the receivables as the issuing entity’s and the indenture trustee’s agent. The servicer, among other things, will manage, service, administer and make collections on the receivables in accordance with its customary servicing practices, using the degree of skill and attention that the servicer exercises with respect to all comparable motor vehicle receivables that it services for itself or others. The servicer is permitted to delegate some or all of its duties to its affiliates or specific duties to sub-contractors who are in the business of performing such duties, although the servicer will remain liable for the performance of any duties that it delegates to another entity.

The servicer will have full power and authority to do any and all things in connection with such managing, servicing, administration and collection that it may deem necessary or desirable. The servicer will make reasonable efforts to collect all payments called for under the terms and provisions of the receivables as and when the same become due in accordance with its customary servicing practices.

VW Credit has made adjustments to its customary servicing practices over time, particularly in the areas of collections timing, collections intensity, repossession timing and business processes and workflow. Most of these adjustments are introduced on a limited and controlled trial basis and are implemented program-wide after VW Credit determines that those adjustments will result in an overall improvement in servicing and collections.

The servicer will, in accordance with its customary servicing practices, take such steps as are necessary to maintain perfection of the security interest created by each receivable in the related financed vehicle. The issuing entity will authorize the servicer to take such steps as are necessary to re-perfect such security interest on behalf of the issuing entity and the indenture trustee in the event of the relocation of a financed vehicle or for any other reason.

Under the sale and servicing agreement, the servicer will covenant not to release the financed vehicle securing each receivable from the security interest granted by that receivable in whole or in part, except as required by applicable law or court order or in the event of payment in full by or on behalf of the related obligor or payment in full less a deficiency which the servicer would not attempt to collect in accordance with its customary servicing practices or in connection with repossession or except as may be required by an insurer in order to receive proceeds from any insurance policy covering that financed vehicle. If this covenant is breached, under the sale and servicing

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agreement, the servicer will be required to repurchase the related receivable if such breach materially and adversely affects the interests of the issuing entity or the noteholders in the related receivable. In addition, if the servicer extends the date for final payment by the obligor on any receivable beyond the last day of the collection period prior to the final scheduled payment date for the latest maturing class of notes or reduces the contract rate or outstanding principal balance with respect to any receivable other than as required by applicable law or court order, under the sale and servicing agreement the servicer will be required to repurchase the related receivable, if such change in the receivable would materially and adversely affect the interests of the issuing entity or the noteholders in such receivable.

The servicer, in its capacity as custodian, will hold the receivable files for the benefit of the issuing entity and the indenture trustee. In performing its duties as custodian, the servicer will act in accordance with its customary servicing practices. The servicer will promptly report to the issuing entity and the indenture trustee any failure on its part to hold a material portion of the receivable files and maintain its accounts, records, and computer systems as provided by the sale and servicing agreement and promptly take appropriate action to remedy any such failure. The servicer may, in accordance with its customary servicing practices, (i) maintain all or a portion of the receivable files in electronic form and (ii) maintain custody of all or any portion of the receivable files with one or more of its agents or designees.

Additionally, under the sale and servicing agreement the servicer and its affiliates may engage in any marketing practice or promotion or any sale of any products, goods or services to obligors with respect to the receivables so long as such practices, promotions or sales are offered to obligors of comparable motor vehicle receivables serviced by the servicer for itself and others, whether or not such practices, promotions or sales might result in a decrease in the aggregate amount of payments on the receivables, prepayments or faster or slower timing of the payment of the receivables, provided, however, that if the servicer (i) extends the date for final payment by the obligor of any receivable beyond the last day of the collection period prior to the final scheduled payment date for the latest maturing class of notes or (ii) reduces the contract date or outstanding principal balance with respect to any receivable other than as required by applicable law or court order, it will promptly purchase such receivable. The servicer may refinance any receivable and deposit the full outstanding principal balance of such receivable into the collection account. The receivable created by such refinancing shall not be property of the issuing entity. The servicer and its affiliates may also sell insurance or debt cancellation products, including products which result in the cancellation of some or all of the amount of a receivable upon the death or disability of the obligor or any casualty with respect to the financed vehicle.

The servicer, in its sole discretion, may in accordance with its customary servicing practices sell any receivable’s deficiency balance. Net proceeds of any such sale allocable to the receivable will constitute Liquidation Proceeds, and the sole right of the issuing entity and the indenture trustee with respect to any such sold receivables will be to receive such Liquidation Proceeds. Upon such sale, the servicer will mark its computer records indicating that any such receivable sold no longer belongs to the issuing entity. The servicer is authorized to take any and all actions necessary or appropriate on behalf of the issuing entity to evidence the sale of the receivable free from any lien or other interest of the issuing entity or the indenture trustee.

See “The Transaction Documents” in the accompanying prospectus, which describes other obligations of the servicer under the sale and servicing agreement.

AFFILIATIONS AND CERTAIN RELATIONSHIPS

The depositor and VW Credit, as servicer, as sponsor and as administrator, are affiliates. Neither the indenture trustee nor the owner trustee is an affiliate of any of the foregoing parties, but Citibank, N.A., the owner trustee, Citicorp Trust Delaware, National Association, the issuer Delaware trustee, and Citigroup Global Markets Inc., one of the underwriters, are affiliates, and Deutsche Bank Trust Company Americas, the indenture trustee, and Deutsche Bank Securities Inc., one of the underwriters, are affiliates. Additionally, neither the indenture trustee nor the owner trustee is an affiliate of the other.

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THE RECEIVABLES POOL

The characteristics set forth in this section are based on the pool of receivables as of the cut-off date.

Criteria Applicable to Selection of Receivables

The receivables sold to the issuing entity on the closing date will be selected for inclusion in the pool by several criteria. These criteria include, among other things, the requirements that, as of the cut-off date, each receivable:

All of the receivables are Simple Interest Receivables. See “The Receivables—Calculation Methods” in the accompanying prospectus.

As of the cut-off date, the weighted average FICO^®* score of the receivables as of origination of the related receivables is 762 (excluding receivables of obligors with no FICO^® score). Additionally, 0% of the net pool balance as of the cut-off date is composed of obligors with no FICO^® score available as of origination of the related receivables. The FICO^® score of an obligor is calculated as of origination of the related receivable in the manner described in “Origination and Servicing Procedures—Underwriting Procedures” in the accompanying prospectus. A FICO^® score is a measurement determined by Fair, Isaac & Company using information collected by the major credit bureaus to assess credit risk. Data from an independent credit reporting agency, such as FICO^® score, is one of several factors that may be used by the originator in its credit scoring system to assess the credit risk associated with each applicant, see “Origination and Servicing Procedures—Underwriting Procedures” in the accompanying prospectus. FICO^® scores are based on independent third party information, the accuracy of which cannot be verified. FICO^® scores should not necessarily be relied upon as a meaningful predictor of the performance of the receivables. In addition, FICO^® scores may change over time, depending on the conduct of the obligor and changes in credit score technology and therefore, an obligor’s FICO^® score at any time in the future may be higher or lower than the obligor’s FICO^® score as of origination of the related receivable. See “Risk Factors—Credit scores and historical loss experience may not accurately predict the likelihood of losses on the receivables” in this prospectus supplement.

Payment of any expenses incurred in connection with the selection and acquisition of the receivables will be made by the depositor or its affiliates directly, rather than out of the offering proceeds.

There are no material direct or contingent claims that parties other than the secured parties under the indenture have regarding any receivables.

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Pool Underwriting

As described in “Origination and Servicing Procedures—Underwriting Procedures” in the accompanying prospectus, under VW Credit’s origination process, credit applications are evaluated when received and are either automatically approved, automatically rejected or forwarded for review by a VW Credit credit analyst based on VW Credit’s electronic decisioning model. Applications that are not automatically approved are ultimately reviewed by a VW Credit credit analyst with appropriate approval authority. 19,777 receivables, having an aggregate principal balance of approximately $442,038,526.82 (approximately 41.14% of the net pool balance as of the cut-off date) were automatically approved, while 26,961 receivables, having an aggregate principal balance of approximately $632,325,641.75 (approximately 58.86% of the net pool balance as of the cut-off date) were evaluated and approved by a VW Credit credit analyst with appropriate authority in accordance with VW Credit’s written underwriting guidelines. None of the receivables in the pool were originated with exceptions to VW Credit’s written underwriting guidelines, nor were any receivables in the pool approved after being automatically rejected by the electronic decisioning model.

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Pool Stratifications

The composition, distribution by remaining term, distribution by APR, distribution by FICO^® score, distribution by original term, distribution by seasoning, geographic distribution by state of the billing address of the obligor and distribution by vehicle type, in each case of the receivables as of the cut-off date, are set forth in the tables below.

Composition of the Receivables Pool

As of the Cut-off Date

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Distribution of the Receivables by Remaining Term

As of the Cut-off Date

Distribution of the Receivables by APR

As of the Cut-off Date

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Distribution of the Receivables by FICO^® Score

As of the Cut-off Date

Distribution of the Receivables by Original Term

As of the Cut-off Date

Distribution of the Receivables by Seasoning

As of the Cut-off Date

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Geographic Distribution of the Receivables by State

As of the Cut-off Date

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Distribution of the Receivables by Vehicle Type As of the Cut-off Date

Delinquencies, Net Credit Loss and Repossession Experience

The following tables provide information relating to delinquency, credit loss and repossession experience for each period indicated with respect to all motor vehicle receivables serviced by VW Credit. This information includes the experience with respect to all motor vehicle receivables serviced as of each respective date or during each listed period. The following statistics include motor vehicle receivables with a variety of payment and other characteristics that may not correspond to the motor vehicle receivables in the receivables pool. In addition, motor vehicle receivables with an original term greater than 60 months and the relative percentage of used vehicles in VW Credit’s portfolio has increased over time, which has resulted in a higher percentage of longer term loans and loans financing used vehicles being held by the issuing entity than was present in VW Credit’s motor vehicle receivables servicing portfolio as of the dates and for the periods indicated. As a result, there can be no assurance that the delinquency and credit loss experience with respect to the motor vehicle receivables in the receivables pool will correspond to the delinquency and credit loss experience of VW Credit’s motor vehicle receivables servicing portfolio set forth in the following tables.

VW Credit Managed Retail Portfolio

Delinquency Experience^(1)(2)(4)

(Dollars in Thousands)