Volkswagen announces a €51.6 billion investment in the coming five years

Article by Christian Andrei, on November 19, 2010

Volkswagen announced today that it will invest almost 51.6 billion euros (nearly $71 billion) in its automotive division within five years as it prepares to overtake Toyota and become the No. 1 global automaker in sales and profitability by 2018.

According to the manufacturer, almost 27.7 billion euros will be invested in order to upgrade the product range of all the group's brands, which include Audi, Bentley, Porsche and Lamborghini, but also VW, Skoda and Seat volume brands.

Still, it appears that Vw wants to focus on vehicles, successor models and derivatives in almost all vehicle classes.

And you know what this means: that the customers will get more and more vehicles. Volkswagen also announced that it will invest more in developing new generations of engines with enhanced performance, fuel consumption and emission levels.

In addition, the German manufacturer will continue developing new hybrid and electric motors.

Prof. Dr. Martin Winterkorn shared that the Volkswagen Group is expected to help shape the technological turning point in different key areas of the auto industry. As such, the company has continued to invest in newer models, efficient drives, and many environment friendly technologies, he added.

Winterkorn is Volkswagen Aktiengesellschaft's Chairman of the Board. Winterkorn said that the company has systematically pursued the goals set in its Strategy 2018 in order to increase profitability even more and make the brand the most future-proof in the industry.

The investment program of the company plays an important role. Bernd Osterloh, Chairman of VW’s Group Works Council, added that the investments underlined the brand's goal of becoming the top automaker for its customers, employees, and even shareholders, considering that the investments have been targeted for these three groups.

Since the company has continued to release new, high-quality, and attractive models to its customers plus the investment in its locations, the jobs of the employees are safeguarded. Osterloh stressed that the company's shareholders are also able to profit as the company has agreed that all investments must have a payoff.

Press Release

Volkswagen Group to invest €51.6 billion in the coming five years

The Volkswagen Group will invest around €51.6 billion in its Automotive Division in the coming five years. Investments in property, plant and equipment will account for €41.3 billion. More than half of this (57 percent) will be invested in Germany alone. Besides investments in property, plant and equipment, this total amount includes additions to capitalized development costs of €10.3 billion. This is the result of the Group’s investment planning for 2011 to 2015, which the Supervisory Board of Volkswagen Aktiengesellschaft discussed at its meeting today.

“The Volkswagen Group will help shape the technological turning point in key areas of the automotive industry and, to do this, will continue investing in environmentally friendly technologies, efficient drives and new models. We are systematically pursuing the goals of our Strategy 2018 to further increase our profitability and to make Volkswagen the world’s most future-proof automotive group. The investment program we have now resolved will play a significant role in this”, said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft.

“These investments underline Volkswagen’s goal of becoming the leading automobile manufacturer for its customers, employees and shareholders, because our investments are aimed precisely at these three groups. New, attractive and high-quality models for our customers as well as investments in our locations safeguard our colleagues’ jobs. Our shareholders also profit from this, not least because at Volkswagen we all agree that every investment must pay off”, stressed Bernd Osterloh, Chairman of VW’s Group Works Council.

At €27.7 billion, the Group will spend most of the total amount to be invested in property, plant and equipment in the Automotive Division on modernizing and extending the product range of all its brands. The main focus will be on new vehicles, successor models and derivatives in almost all vehicle classes based on modular technology. This will allow the Volkswagen Group to systematically continue its model rollout with a view to tapping new markets and segments. In powertrain production, new generations of engines will be launched with enhanced performance, fuel consumption and emission levels. The Group will continue driving forward the development of hybrid and electric motors in particular.

In addition, Volkswagen will make cross-product investments of €13.6 billion over the next five years. The Group’s demanding quality targets and the continuous improvement in its production processes mean that the new products also require changes to be made in the press shops, paintshops and assembly facilities. The new plant in North America will begin operating in 2011. Beyond production, investments are planned mainly in the areas of development, quality assurance, genuine parts supply and information technology.

The ratio of capital expenditure to sales revenue will be at a competitive level of around 6 percent on average in the period 2011 to 2015.

The joint ventures in China are not consolidated and are therefore not included in the above figures. These companies will invest a total of €10.6 billion in the period 2011 to 2015. This amount will be funded in full from the cash flow generated by the Chinese joint ventures.

Topics: vw, investment

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