Volkswagen shortens investment plans amid European challenges

The three-year investment strategy, which covers the period from 2013 to 2015, is 24 months shorter than Volkswagen's usual five-year planning cycle, and highlights the German manufacturing giant’s cautious approach to the uncertain market.

Volkswagen Group CEO Martin Winterkorn said despite the economic challenges in Europe and a shortening of its investment plans, the group was spending more than ever in pursuit of achieving its long-term goals.

“This investment is the key to Volkswagen Group’s innovation and technology leadership. It enables us to further strengthen our competitive position and ensure that we are fit for the future,” Winterkorn said.

Investment in property, plants and equipment account for 39.2 billion euros ($48.6 billion) of the total sum, with 60 per cent of that figure ($29.2 billion) destined for the group’s 27 German production facilities.

Volkswagen Group works council chairman Bernd Osterloh said strong investment and a focus on production versatility would be fundamental to the company’s profitable and sustainable growth.

“We are … investing in securing our proven flexible production network between plants,” Osterloh said. “This enables flexible production of different volumes and products at our locations to meet market requirements.

“The investment planning agreed upon also represents a clear commitment to securing jobs and employment at Volkswagen, particularly in light of the difficult conditions seen in the automotive industry.”

The investment will see continued development of new-generation engines – including hybrid and electric motors – with a focus on performance enhancements and reduced fuel consumption and emissions.

Money will also be directed towards a new Audi plant in Mexico, the expansion of Porsche’s Leipzig plant for the new premium mid-sized Macan SUV, as well as increased production of automatic transmissions.

The last time Volkswagen laid out a three-year strategy was in 2009 in the wake of the global financial crisis.