VW Group to Invest €51.6 Billion in its Automotive Division Over the Next Five Years

€51.6 billion, or about US$71 billion at today's exchange rates, is a lot of money - equal to around 15% of Sweden's GDP, for example. Nevertheless, that's the amount of money that will be poured into the Volkswagen Group's automotive division for production capacity and vehicle development in the next five years. The goal, according to VW CEO Martin Winterkorn, is "to make Volkswagen the world's most future-proof automotive group".

The new budget will see €41.3 billion invested in property, factories and equipment with more than half of this amount (57%) finding its way into Germany. The remaining €10.3 billion consists of additions to capitalized development costs.

VW said that it will spend most of the budget (€27.7 billion) on modernizing and extending the product range of all its brands with the main focus being on new vehicles, successor models and derivatives in almost all vehicle classes based on modular technology.

"This will allow the Volkswagen Group to systematically continue its model rollout with a view to tapping new markets and segments," the company said in a statement.

In terms of powertrain production, the Group plans to launch a new generation of engines "with enhanced performance, fuel consumption and emission levels," and continue the development of hybrid and electric motors.

Furthermore, €13.6 billion will be used for cross-product investments. Volkswagen will thoroughly modernize or open new press shops, paintshops and assembly facilities including its new North American plant, which is scheduled to begin operating in 2011.

"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", said Prof. Dr. Martin Winterkorn.

In addition, VW said that its Chinese joint ventures will see a total investment of €10.6 billion in the period 2011 to 2015. However, this investment will be fully funded from the cash flow generated by the Chinese joint ventures themselves and is not included in the €51.6 billion budget.

By Csaba Daradics