Sat, Nov 22, 2014 - Page 13 News List

VW to spend US$106bn chasing Toyota for sales lead

Bloomberg

Volkswagen AG will keep pouring money into new vehicles, technology and factories as it chases Toyota Motor Corp for the lead as the world’s largest automaker.

Volkswagen will invest 85.6 billion euros (US$106 billion) over the next five years, Europe’s biggest manufacturer of cars, vans and heavy trucks said yesterday in a statement.

The plan calls for an increase in average annual spending on auto operations to about 17.1 billion euros a year, compared with 16.8 billion euros under its previous rolling five-year budget.

“We will continue to invest in the future to become the leading automotive group in both ecological and economic terms,” chief executive officer Martin Winterkorn said in the statement. “Development costs will remain high in the future as a result of high innovation pressure and increasing demands on the automotive industry.”

Winterkorn has pushed Volkswagen to expand in recent years and expects to sell more than 10 million vehicles this year for the first time, four years earlier than initially planned.

The Wolfsburg, Germany-based manufacturer narrowed Toyota’s global sales lead to 72,000 vehicles in the first nine months of the year from 227,000 a year earlier, as General Motors Co fell further back into third place.

Volkswagen’s Chinese joint ventures, which are not consolidated and therefore not included in the company’s figure, will boost their investments in the world’s largest auto market to 22 billion euros through 2019. Including this spending, the group’s five-year budget will increase to 107.6 billion euros from 102.4 billion euros under the previous plan.

Capital expenditures will remain at between 6 percent to 7 percent of revenue, Volkswagen said.

Since Winterkorn became chief executive in 2007, the company has added the Porsche, Scania, MAN and Ducati brands. VW also more than doubled its number of factories around the world to 107.

Volkswagen plans to introduce more than 100 new or revamped vehicles this year and next.

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