VW to ringfence investment on product development with EUR84 2bil investment… — Volkswagen Cross UP!

20 Мар 2015 | Author: | Комментарии к записи VW to ringfence investment on product development with EUR84 2bil investment… — Volkswagen Cross UP! отключены

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VW to ring-fence investment on product with EUR84.2-bil. investment next five years

plan would appear to be an for VW to maintain margins in recognition of the state of the European market and concern over the medium-term of the Chinese market. The company’s in recent years has been by desirable, high quality with highly efficient and the company is wisely continuing to and focus on vehicle RD.

The Volkswagen Group has announced a new five-year investment plan outlining plans of EUR84.2 billion billion) on new model development and new capacity over the next years, according to a company release. The vast majority of the which is being made in the core automotive division be made in product development and research and development (RD), two-thirds of the overall figure in that area. However, in of the difficult environment in the European and possible concerns over the of the market in China the company is spending plans in some product development areas. In investments in property, plant and in the Automotive Division will to EUR63.4 billion. However, investments in property, plant and will be down by EUR0.5 per year between 2013 and in comparison to the previously stated plan between 2013 and Commenting on the company’s slightly cautious spending outlook, CEO Martin Winterkorn said, We continue to invest strongly in our and technology leadership, despite the economic environment. This once again significantly the Group’s competitiveness and safeguard its I am convinced that this give us extra power on our way to the He added, In times like our disciplined cost and investment will remain a cornerstone of

our activities. The company said lower of investment in property and equipment is due among other to the postponement of construction projects and optimization. Investment in products and remain unaffected by the decline. In to investments in property, plant and the plan also includes development costs of EUR19.5 and other investments. including for assets in the amount of EUR1.3 The increase in capitalised development as against previous planning is due to investments in connection with the CO2 targets.

In terms of the total amount on total investments in property, and equipment in the Automotive Division billion, around 65% of the total will be allocated to new product and modernising existing ones the group’s brands. These be based on new vehicle launches on the company’s two new main modular architectures, the new MQB platform and the MLB platform for vehicles. In addition, much of investment will be directed at the group’s conventional ICE powertrain in order to ensure compliance the Euro-VI emissions standard. The will also continue to heavily in its alternative powertrain which includes the development of and electric vehicles (EVs), as as the company’s existing natural gas vehicle programme, including the A3 g-tron. In addition, the Group make cross-product investments of billion over the next years, including spending to capacity.

Outlook and implications

The new five-year plan is a recommitment to the firm’s values of spending heavily in the of vehicle and powertrain RD, which has integral to the company’s growth in years, and the recognition that to its margins, it needs to reduce in some areas given the European market and some over the future medium- and development of the Chinese market, the group is the market leader in of combined vehicle sales. strong reliance on China mean it would be disproportionately by any overheating of the Chinese economy or slowdown in the country’s passenger car However, the Chinese JVs with Automotive (SAIC) and First Works (FAW) are not consolidated and are also not included in the above budget figures. In turn, VW invest a total of EUR18.2 in new production facilities and products 2014 and 2018. These will be financed from the own funds. The company has become cost-conscious as a result of the instability in of its core global markets. In CFO Hans Dieter Pötsch that further belt-tightening was and soon afterwards outlined to boost profitability at the VW and SEAT (see Germany: 13 September Frankfurt Motor Show VW Group to focus on profitability in European market ). At a presentation at the Motor

Show, Pötsch said the company was setting margin for the core VW brand of 6%, after a 4% last year. SEAT has set a margin target of 5% despite EUR156 million last while Skoda will a margin target of between 6% and 8%, it is currently managing having a 7% margin in 2012. The company has stated that it is already in terms of its cost base its new modular architecture, which has been consolidated into the spending plans and which generate significant cost-savings forward, although there is so about exactly how much benefit VW will derive the MQB programme (see Germany: 1 2013: VW CFO says MQB platform is saving money ). Perhaps the concern relating to VW Group’s cost base and competiveness to its investment plans is its ongoing to invest heavily in domestic and RD operations as a result of how integrated the council
model is to VW’s operations. It has VW well for decades and led to harmonious and beneficial relations. However, in of global economic uncertainty it be better served by having flexibility in the geographical spread of its programme. More than of the investments in property, plant and (almost 60%) will be in Germany.

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