Volkswagen Group has announced an investment of a total of €85.6 billion in new models, innovative technologies and its global presence in the automotive sector in the next five years. The German brand said that around two-thirds of the total investment will go into efficient vehicles, drives and more environmentally friendly production.
Around 56% of the total investment will be in property, plant and equipment in Germany. Apart from this €85.6 billion investment, the company’s Chinese joint ventures will also invest €22.0 billion during the next five years. The company also plans to make cross-product investments of €23.0 billion in the coming five years. These investments will include spending to expand capacity, the new Audi plant in Mexico, and the recently announced new Crafter plant in Poland.
More information regarding this announcement is available in the press release following.
Volkswagen Group to invest in new products, innovative technologies and global presence- Press Release
- EUR 85.6 billion for new models, environmentally friendly technologies and production facilities in the coming five years
- Capex ratio to remain at a competitive level of between six and seven percent
- Over half of investments in property, plant and equipment in Germany
- Chinese joint ventures to invest EUR 22.0 billion in the period from 2015 to 2019
- CEO Winterkorn: “We will continue to invest in the future to become the leading automotive group in both ecological and economic terms – with the best and most sustainable products.”
The Volkswagen Group will invest a total of EUR 85.6 billion in new models, innovative technologies and its global presence in its Automotive Division over the coming five years. Around two-thirds of the total investment amount will flow into increasingly efficient vehicles, drives and more environmentally friendly production. This is the result of the Group’s investment planning for 2015 to 2019 discussed by the Supervisory Board of Volkswagen Aktiengesellschaft at its meeting on Friday. “We will continue to invest in the future to become the leading automotive group in both ecological and economic terms – with the best and most sustainable products”, said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg. “Development costs will remain high in the future as a result of high innovation pressure and increasing demands on the automotive industry from CO2 legislation. As a Group, we have the expertise and financial strength to continue to extend our technology leadership and to reach our goals for 2018.”
Investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) in the Automotive Division will amount to EUR 64.3 billion across the planning horizon as a whole, on a level with the planning approved in the previous year for the period from 2014 to 2018. “For us, efficiency means not least that capex in the Automotive Division will remain at the same level over the entire planning period – despite increasing demands and the additional growth we have planned”, said Winterkorn. The capex ratio will be at a competitive level of between six and seven percent in the period from 2015 to 2019.
In addition to spending on capex, the plans also include capitalized development costs of EUR 21.9 billion and proceeds from asset disposals of EUR 0.6 billion, net of investments in financial assets. The capitalized development costs include upfront investments in connection with complying with environmental requirements and in expanding and upgrading the model portfolio.
More than half of the capex spending (around 56 percent) will be made in Germany. “This investment program once again clearly demonstrates our commitment to our domestic plants and employees. Our 28 German locations are the backbone of the Group – our outstandingly qualified team and highly efficient production here are a key competitive advantage, and one we intend to maintain”, said Winterkorn. “At the same time, we are also strengthening and expanding our international presence to systematically leverage market opportunities all over the world.”
Bernd Osterloh, Chairman of Volkswagen’s Group Works Council, said: “The planned investment amount shows that Volkswagen is continuing to invest substantially in its global locations – and consequently in the almost 600,000 jobs around the world. At the same time, this planning round again clearly demonstrates Volkswagen’s commitment to Germany as a business location, which certainly distinguishes the Company from other competitors. The investments also underscore why we, as employee representatives, support Dr. Winterkorn’s efficiency program: investing in products and locations is the only way to secure long-term employment. Together, we aim to ensure that the available financial resources are used even more efficiently in the future so that these investments can be made.”
At EUR 41.3 billion (roughly 64 percent), the Group will spend most of the total capex in the Automotive Division on modernizing and extending the product range for all its brands. The main focus will be on expanding the SUV range – in particular in the A/A0 class – as well as on modernizing part of the light commercial vehicle portfolio. At the same time, investments are also planned in new vehicles and successor models in almost all vehicle classes, which will be based on the modular toolkit technology and related components. This will allow the Volkswagen Group to systematically continue its model rollout with a view to tapping new markets and segments.
In the area of powertrain production, new generations of engines will be launched offering additional enhancements to performance, fuel consumption and emission levels. The Group will also continue to press ahead with the development of hybrid and electric drives.
In addition, the Company will make cross-product investments of EUR 23.0 billion over the next five years. These include spending to expand capacity, a new Crafter plant in Poland and the new Audi plant in Mexico. Other investment focuses are press shops and paintshops, reflecting the Company’s high quality targets and the continuous improvement of its production processes. Investments outside production are mainly planned for the areas of development, quality assurance, sales, genuine parts supply and information technology.
The joint ventures in China are not consolidated and are therefore not included in the above figures. They will invest a total of EUR 22.0 billion in new production facilities and products in the period from 2015 to 2019. These investments will be financed from the joint ventures’ own funds.