core sector communique

Volkswagen Group Continues Long-Term Growth Strategy

 

• Investments in new models and plants

 

• Continued high level of investment in Germany

 

Wolfsburg, November 20, 2009 – The Volkswagen Group’s Automotive Division will invest around €25.8 billion in the coming three years. Investments in property, plant and equipment will account for €19.9 billion, half of which will be invested in Germany alone. The Group’s home market thus remains the main focus of its capital spending. In addition to investments in property, plant and equipment, €5.9 billion of the total represents capitalized development costs. This is the outcome of the investment planning for the years 2010 to 2012, which Volkswagen Aktiengesellschaft’s Supervisory Board discussed at its meeting today.

 

“The automotive industry is facing significant economic and technical challenges. The Volkswagen Group is vigorously driving forward its long-term growth strategy by investing in environmentally friendly models, innovative technologies and new plants. We are continuing to make focused investments in our future”, said Prof. Dr. Martin Winterkorn, Chairman of Volkswagen Aktiengesellschaft’s Board of Management.

 

“These investments are the basis for secure jobs and the further development of our global facilities. We can only offer the best products tomorrow if we invest today. And this is what the Board of Management and the workforce throughout the Volkswagen Group are focusing on”, stressed Bernd Osterloh, Chairman of VW’s Group Works Council.

 

At €13.3 billion, the Group is targeting the majority of its spending on property, plant and equipment in the Automotive Division for modernizing and expanding its product range. The main emphasis is on new vehicles, successor models and model variants in almost all vehicle classes, based on the multi-brand modular matrix strategy. With this approach, the Volkswagen Group is systematically extending its new model initiative to move into new markets and segments. In the area of powertrains, new engine generations will be introduced that offer additional improvements in performance, consumption and emissions. Automatic gearbox capacity will be aligned with growing demand.

 

In addition, €6.6 billion will be invested in cross-product technologies in the coming three years. Because of the high quality and cost targets, the new products require modifications to press and paint shops as well as assembly facilities. Outside manufacturing, investments are planned mainly in the areas of development, quality assurance, genuine parts supply and IT. Construction of the new plant in North America is currently is progress, and the plant will start operating in 2011.

 

Production at the new facilities in Russia and India is already being ramped up, allowing these growth markets to be supplied with locally manufactured vehicles. As a result of up-front expenditures on new products, powertrains and production facilities, the ratio of investments in property, plant and equipment (capex) to sales revenue in the years 2010 to 2012 will average a competitive level of around 6 percent.

 

The joint venture companies in China are not consolidated and are therefore not included in the figures shown above. These companies will invest a total of €4.4 billion between 2010 and 2012.