Volkswagen Group to invest €51.6B over next five years; seeking to make itself “future-proof”
19 November 2010
The Volkswagen Group will invest around €51.6 billion (US$76.5 billion) in its Automotive Division in the coming five years. This total amount includes additions to capitalized development costs of €10.3 billion (US$14.1 billion).
At €27.7 billion (US$37.9 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. 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.
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.
—Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft
In addition, Volkswagen will make cross-product investments of €13.6 billion (US$18.6 billion) over the next five years. 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% on average in the period 2011 to 2015.
The joint ventures in China are not consolidated and are not included in the above figures. These companies will invest a total of €10.6 billion (US$14.5 billion) in the period 2011 to 2015. This amount will be funded in full from the cash flow generated by the Chinese joint ventures.
The Volkswagen Group is one of the world’s leading automobile manufacturers and the largest carmaker in Europe. In 2009, the Group increased the number of vehicles delivered to customers to 6.336 million (2008: 6.257 million), corresponding to a 11.3% share of the world passenger car market.
The Group currently comprises nine automotive brands: Volkswagen, Audi, SEAT, Škoda, Volkswagen Commercial Vehicles, Bentley, Bugatti, Lamborghini and Scania. The Group is trying to complete a complex merger with Porsche.
$$76.5 BILLION dollars is a major investment in automotive development. It would appear that Volks is aware they are on the cusp of the first MAJOR transportation revolution on planet Earth since the buggy whip went to sleep.
Let's hope that VW and its premium brands go full force to electrification. At a recent auto show we were impressed to see Porsche selling a hulking SUV with start/stop hybrid technology on board. Not much in the way of EV powertrain - and using a large format NiMh battery - but a start.
Of course we welcome all major manufacturers to the electrification revolution. This scale investment in EV development is what it will take to capture market share.
Posted by: Reel$$ | 19 November 2010 at 05:16 PM
If VW does every thing it is planning to do, it may be very close to the first place withing one decade or less, unless 20+ Chinese automobile firms pool into one or two firms.
Whoever takes the lead with efficient, lower cost, common sense electrified vehicles, will rise to the top. Will it come from Japan, China, Korea, India, EU, USA, or Brazil? We should know by 2015.
Place your bets.
Posted by: HarveyD | 20 November 2010 at 08:59 AM
I'll go with the front runners at the moment.
Posted by: Reel$$ | 20 November 2010 at 10:26 PM
Would that be Toyota and Nissan-Renault?
Posted by: HarveyD | 21 November 2010 at 01:24 PM