Volkswagen Group is planning to inject around €62.4 billion into its Automotive Division in the next five years (2012-2016), following an investment planning discussion by Supervisory Board on Friday. Volkswagen AG chief executive Martin Winterkorn quipped that the group is investing in forward-looking projects as part of its efforts to become the best carmaker in the world in both economic and ecological terms.
He added that the investment – particularly into environmentally friendly, sustainable models and drives -- will allow them to extend its innovation and technology leadership. Around €49.8 billion will be invested into property, plant and equipment, 57 percent of which will be implemented in Germany. Winterkorn added that the high level of investments into Germany could be the best possible proof of the country’s international competitiveness as a leading manufacturing site.
During the five-year period, ratio of capital expenditure to sales revenue will be around six percent on average. Around €11.6 billion will be used to cover capitalized development costs and €1.0 billion will be invested into financial assets, net of proceeds from asset disposals.
These investments into new production facilities, new models, alternative drives and modular toolkits should allow the VW Group to lay the foundation and achieve profitable and sustainable growth. Bernd Osterloh, Group Works Council Chairman, quipped that the investments – in the form of innovative products, manufacturing processes and global locations -- signify a move that would ensure that the Group remains fit for the future.
He added that such investment safeguards jobs for the long term. Osterloh added that the board’s planning discussion is proof of VW’s commitment to Germany. He noted that around €100 million will be used in improving the flexibility in the body and white production area at the carmaker’s Wolfsburg facility as well as at its Emden’s plant.
He remarked that the investments into the Wolfsburg and Emden locations would guarantee operations at the Emden-Wolfsburg-Zwickau turntable. Osterloh said that it should be possible to manufacture different volumes of different products in these locations in the future. Investments in these locations will concentrate on products like new diesel and petrol engines, alternative drives, and new direct shift gearboxes.