Volkswagen Group to invest in new models and plants

The Supervisory Board of Volkswagen Aktiengesellschaft today discussed the Group’s investment planning for the period from 2008 to 2010. “Volkswagen will continue its successful strategy and drive forward its profitable growth. We will develop and launch numerous additional new models in the next three years. We will also invest in innovative technologies and our new plants in Russia and India,” said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft.

 

In line with this, Volkswagen will invest approximately €28.9 billion in the Automotive Division in the next three years. As well as investments in property, plant and equipment, this total amount also includes additions to capitalized development costs and investments in financial assets.

 

“As employee representatives, we welcome the strategy of continued growth being pursued by Prof. Dr. Winterkorn. The Board of Management and the Works Council agree that we must substantially increase productivity. At the same time, we must also lift unit sales to safeguard employment. The planned investments are the basis for this,” said Bernd Osterloh, Chairman of the Group Works Council of Volkswagen Aktiengesellschaft.

Investments in property, plant and equipment will account for €20.9 billion, more than half of which will be spent in Germany alone. As a result of upfront expenditures on new products, powertrains and locations, the ratio of investments in property, plant and equipment to sales revenue (capex) will be at a competitive level of approximately 6% on average in the period from 2008 to 2010, following the relatively low figure achieved in recent years.

 

Most of the total amount invested in property, plant and equipment in the Automotive Division (€13.8 billion) will be spent on modernizing and extending the product range. The main focus will be on new vehicles, successor models and derivatives in virtually all vehicle classes. These will enable the Volkswagen Group to systematically continue its model initiative so as to develop new markets and new segments. In powertrain production, the Group will launch new generations of petrol engines with improved performance, fuel efficiency and emission levels. Volkswagen’s diesel engines will be converted to use common rail technology, while capacity for automatic gearboxes will be adjusted to reflect increasing demand.

 

In addition, €7.1 billion of cross-product investments will be made in the next three years. Due to quality and cost targets, the new products will also require adjustments at Volkswagen’s press shops, paintshops and assembly lines. Apart from production, the Group will invest mainly in the areas of development, quality assurance, genuine parts supply and information technology. Volkswagen also plans to expand its new plants in Russia and India in order to supply these growing markets with locally produced vehicles.

 

The Group’s Chinese joint ventures are not included in consolidation. These companies will invest a total of €2.1 billion in the period from 2008 to 2010.