Fri, 18 Oct 2019

Volkswagen to spend billions on innovating its vehicle range

By Jay Jackson, Arizona State News.Net
17 Nov 2018, 04:48 GMT+10

WOLFSBURG, Germany - The Volkswagen Group has allocated almost €44 billion ($50 billion) for developments in electric cars, driverless cars, new mobility services and digitalization in its vehicles and at its plants.

The funds will be invested over the next 5 years to the end of 2023.

The allocation, the company says, represents approximately one-third of total expenditure for the 2019-2023 planning period and is the outcome of the group's planning round, which has now been completed and was discussed and endorsed by the Supervisory Board of Volkswagen Aktiengesellschaft at its meeting on Friday.

"One aim of the Volkswagen Group's strategy is to speed up the pace of innovation. We are focusing our investments on the future fields of mobility and systematically implementing our strategy", Herbert Diess, CEO of Volkswagen Aktiengesellschaft, said on Friday after the regular Supervisory Board meeting.

The group says it is working consistently on improving earnings at all brands and companies in order to finance the enormous challenges of the future from its own resources. Programs to secure the agreed targets have been initiated by the brands and companies.

 "We stand by our investment and cost targets, we are focused and disciplined, and we will systematically continue on our chosen path," Frank Witter, Group Board Member for Finance and IT said Friday.

Both the capital expenditure ratio and the research and development ratio in the group's automotive division are expected to continue to decline to a competitive level of 6% from 2020 onward. The net cash flow target of a minimum of €10 billion ($11.3 billion) by 2020 remains valid the company said. The diesel crisis will, however, still impact cash outflows in planning years 2019 and 2020.

The joint ventures in China are not consolidated and are therefore not included in the plans, says VW. These joint venture companies provide their own funding for investments in plants and products.

In addition to investment planning, the Supervisory Board said it also consulted on what it described as further ground-breaking future projects at its meeting on Friday. The talks with Ford about an industrial cooperation announced earlier, they said are progressing positively. The two companies complement each other in terms of both products and regions. The joint development and manufacture of a range of light commercial vehicles is at the core of the envisaged cooperation. Volkswagen says it expects significant synergy effects from the potential to lower costs or increase performance via scales. Ford and Volkswagen, the company acknowledges, will remain competitors, as the proposed cooperation does not involve commercial, marketing or pricing strategies. Additional fields of cooperation outside the light commercial vehicle segment with the potential for expanding collaboration have also been identified the group said.

The Volkswagen group comprises 12 brands from seven European countries: Volkswagen sedans, Audi, SEAT, SKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen commercial vehicles, Scania and MAN.

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