Volkswagen investing $125b in auto division over next five years

Volkswagen Group chairman Martin Winterkorn said more than two-thirds of the total investment between 2014-2018 would go towards producing more efficient vehicles, drive systems and technologies, as well as reducing the environmental impact of its production process.

“We will continue to invest strongly in our innovation and technology leadership, despite the uncertain economic environment,” Winterkorn said.

“This will once again significantly boost the Group's competitiveness and safeguard its future. I am convinced that this will give us extra power on our way to the top.”

Approximately 41.2 billion euros ($61.2 billion) will be invested in property, plant and equipment in the automotive division, modernising and expanding the product range across all brands, including Audi, Bentley, Bugatti, Lamborghini, Porsche, Seat, Skoda and Volkswagen.

Volkswagen says the main focus will be on developing new vehicles and successor models across almost all vehicle classes, with a view to entering additional markets and segments.

The high level of investment is due, among other things, to the upfront investments relating to the changeover to Euro 6 emissions regulations, which will force a complete revamp of many of the Group’s vehicles and engines.

New generations of engines will be launched, promising enhancements in performance, fuel consumption and emissions, while Volkswagen will also continue its development of hybrid and electric propulsion systems.

The total investment also includes capitalised development costs of 19.5 billion euros ($29.0 billion) and other investments including for financial assets of approximately 1.3 billion euros ($1.9 billion).

Volkswagen’s joint ventures in China are not consolidated and therefore not included in the above figures, though investments in new production facilities and products in the region will total 18.2 billion euros ($27.1 billion) between 2014-2018.