Volkswagen unveils €85.6bn worth of investments over next five years

Volkswagen is to invest €85.6 billion ($106 billion) in its automotive operations over the next five years to push foreign expansion, new models and technology to back its quest for global leadership.

Volkswagen says the bulk of the cash will flow into developing more efficient vehicles and production methods, taking its capital expenditure to between 6 and 7 per cent of revenue from 2015 to 2019, which analysts say amounts to a slight increase in investment spending.

Analysts at investment banking advisory firm Evercore ISI said: “As expected, VW’s five-year capex planning has not become a victim of the company’s efficiency programme which is, among other things, aiming at €5 billion of efficiency gains at the VW brand by 2018.”

Volkswagen shares rose 1 per cent, while the DAX blue chip index was trading up 2 per cent.

About €41.3 billion will go toward developing sports utility vehicles, modernising part of the light commercial vehicle portfolio and developing hybrid and electric drives. At the same time, investments are also planned in new vehicles and successor models in almost all vehicle classes, which will be based on modular toolkit technology and related components.

Volkswagen Group chief executive Martin Winterkorn says the investment plan will help it become “the leading automotive group in both ecological and economic terms with the best and most sustainable products”.

About €23 billion will be spent on expanding capacity at its plant in Poland, where it builds Crafter vans, and the new Audi plant in Mexico, as well as on paint shops and a production facility to make vehicle parts.

Poised to meet its annual sales target of 10 million vehicles four years early in 2014, Volkswagen has also sought to embark on an efficiency drive to save €5 billion across its multi-brand group. – (Reuters)