Volkswagen Group to invest $106 billion over next 5 years in Automotive Division

21 November 2014

The Volkswagen Group will invest a total of €85.6 billion (US$106 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.

Investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) in the Automotive Division will amount to €64.3 billion (US$80 billion), on a level with the planning approved in the previous year for the period from 2014 to 2018. At €41.3 billion (US$51.3 billion)—roughly 64%—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.

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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 systematically to 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 €23.0 billion (US$29 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 €22.0 billion (US$27 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.

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. 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.

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.

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 €21.9 billion (US$27 billion) and proceeds from asset disposals of €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%) will be made in Germany.