Volkswagen Group funnels investment into technology, innovation, and Germany

From the Golf GTI to the classic camper-van, Germany’s Volkswagen has long been one of the world’s most recognised car manufacturers.

And now, with plans to invest EUR 84.2 billion on new technology and factories over the next five years, it is showing signs of becoming the world’s most lucrative.

Ranked 1st in Forbes’ World’s Biggest Auto Companies 2013, the group sold 9.3 million cars last year, including its signature VW models and cars under the Audi, Bentley, Bugatti and Lamborghini brands.

However, Japan’s Toyota Motor was the most valuable on the list.

Investment direction

Over two-thirds of the investment will go towards the company’s “green mission”: i.e. its production of energy-efficient vehicles and environmentally friendly manufacturing procedures, thus strengthening its positive as an innovation and technology leader.

VW’s previous development costs of EUR 19.5 billion highlight the expense of meeting Europe’s CO2 targets for auto-mobiles, and its dedication to being a green leader.

In addition, the car manufacture is revamping its engines to meet euro 6 emission standards.

It has previously stated it will maintain its focus on the development and manufacture of hybrid and electric motors.

In China

The company’s joint ventures in China are not included in the plan yet as they have not been consolidated.

VW will, however, invest EUR 18.2 billion from their own funds to create new production facilities and models in China from 2014 to 2018.

This includes growing factories in China’s south and west areas, and the announcement for plans to build a further five plants.

Domestic growth

The lion’s share of the money – at over half of VW’s investment – will be in property, plants and equipment within Germany.

“At Volkswagen,” head of the management board and Chief Executive Martin Winterkorn noted, “we are clearly committed to Germany as a manufacturing and development location.”

However overall, this figure is down slightly from previous years at EUR 63.4 billion, as the manufacturer postpones certain projects.

The company will also focus on renewing its vehicles and expanding product lines across all brands.

Volkswagen announced the plans last Friday after a supervisory board meeting.

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

“I am convinced that this will give us extra power on our way to the top,” he added.

In 2012, the Eurozone’s largest car manufactured said it would invest EUR 50.2 billion from 2013 to 2015.

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