Volkswagen's $107 Billion 5 Year Plan to Become the World's Biggest Carmaker
German automotive giant Volkswagen is to invest more than $107 billion (€85 million) in the space of five years as it looks to overtake Toyota and become the world’s most prolific car manufacturer.
The owner of Audi, Skoda and Porsche is already Europe’s largest producer, and now second in the world having passed America’s General Motors. The new five year plan involves expansion overseas and the development of new models and manufacturing techniques to reduce carbon emissions.
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It also involves cost cutting to offset the hiked expenditure, with the company bidding to hit pre-tax profits of eight percent of revenues by 2018, to be achieved by making savings of around €10 billion.
Around €40 billion of spending is earmarked for a new range of sports utility vehicles, modernisation of light commercial models and the development of hybrid and electric cars.
This is part of a wider move by the automotive sector to make electric vehicles mainstream, underlined by the recent publicity received by Tesla in the launching of its new Model S and various high-spec features.
Much of the extra financial input (around €22 billion) will come from Chinese joint ventures.
In a statement CEO Martin Winterkorn said: “Development costs will remain high in the future as a result of high innovation pressure and increasing demands on the automotive industry from CO2 legislation.
“As a Group, we have the expertise and financial strength to continue to extend our technology leadership and to reach our goals for 2018.”
Much of the forecast expenditure will go into the company’s German facilities, which could be subjected to increased running costs with unions seeking wage rises of more than five percent.
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