Sept. 16 (Bloomberg) -- Volkswagen AG will invest a record 62.4 billion euros ($86.1 billion) over the next five years to underpin its goal of becoming the worldΆs largest carmaker.
The supervisory board voted today to approve the spending on plants, vehicles and research and development for the carmakerΆs nine brands, the Wolfsburg, Germany-based company said in a statement. VWΆs Chinese joint ventures, which are not consolidated, will invest another 14 billion euros through 2016.
VW is expanding in China, its largest market, as part of a broader plan to leapfrog Toyota Motor Corp. and General Motors Co. and become the worldΆs biggest carmaker by 2018. The effort hit two roadblocks in the past week as a merger with Porsche SE planned for this year was delayed and Suzuki Motor Corp. said it wants to dissolve its 20-month-old alliance.
“VW has its sights firmly pegged on future growth,” said Stefan Bratzel, director of the Center of Automotive Management in Bergisch-Gladbach, Germany. “TheyΆre broadening their presence in lucrative markets like China and utf8 America and optimizing spending on future technologies. After the latest setbacks, the message is VW is more determined than ever.”
Volkswagen preferred shares rose as much as 2.20 euros, or 2 percent, to 114.65 euros and were up 1.3 percent as of 4:03 p.m. in Frankfurt trading. The stock has dropped 6.2 percent this year, valuing the carmaker at 49.9 billion euros.
Expanded Model Offerings
Volkswagen will invest 32.7 billion euros of the money to revamp and extend the model offerings across its brands, which include Audi, Skoda, Lamborghini, Seat and Bentley. The namesake VW unit alone currently offers more than 60 different vehicles.
Chief Executive Martin Winterkorn said this week that the German manufacturer, which operates 62 factories globally, is mulling additional plants in China. VW has already announced plans to add two more Chinese production facilities, bringing its total to 11. VW plans to expand the number of factories it has worldwide to about 70, spokesman Marco Dalan said today.
Volkswagen could sell more than 2.4 million vehicles in China, the worldΆs biggest auto market, this year, the CEO told reporters at the International Motor Show in Frankfurt. “WeΆre rather undersupplied there,” he said. The company has forecast a 5 percent increase in global deliveries this year after selling 7.2 million cars, SUVs and vans in 2010.
“The Volkswagen group is investing a record amount,” Winterkorn said in the statement. “Top of the agenda for us is investments in environmentally friendly, sustainable models and drives.”
German Investments
VW also opened a plant in Chattanooga, Tennessee, in April to supply the U.S. with a midsized sedan specifically developed for the worldΆs second-largest car market. Volkswagen is also expanding capacity in Russia.
Capital expenditures over the five-year period will be around 6 percent of revenue, VW said. More than half the money spent on property, plants and equipment will be in Germany.
VW will spend 95 million euros on expanding production of the Golf hatchback and Tiguan SUV models at its main factory in Wolfsburg, Bernd Osterloh, works council chief told reporters today. VW at the same time will move the share of production of those vehicles destined for North America to that region, Osterloh said, adding that assembly of the models in North America could start as early as 2013.
“We recognize that it makes sense because of foreign- exchange rate parities to build the products in the dollar area to earn a reasonable return,” Osterloh said.
--Editors: Chad Thomas, Chris Reiter.
To contact the reporter on this story: Andreas Cremer in Berlin at
acremer@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at
cthomas16@bloomberg.net
