INVESTMENT AND FINANCIAL PLANNING 2013 TO 2015
IN THE AUTOMOTIVE DIVISION
Based on our current planning, we shall invest a total of €50.2 billion in the Automotive Division in the period from 2013 to 2015. Investments in property, plant and equipment will account for €39.2 billion, more than half of which (60%) will be in Germany alone. The ratio of capital expenditure to sales revenue in the period from 2013 to 2015 will be at a competitive level of 6–7%. Besides investments in property, plant and equipment, investing activities will include additions of €10.6 billion to capitalized development costs. Volkswagen is laying the foundations for profitable, sustainable growth by investing in new facilities and models, as well as by developing alternative drives and modular toolkits.
At €24.7 billion (roughly 63%), we will spend the lion’s share of the total amount to be invested in property, plant and equipment in the Automotive Division on modernizing and extending the product range for our brands. The main focus will be on new vehicles, derivatives and successor models in almost all vehicle classes, which will be based on the modular toolkit technology and related components. This will allow the Volkswagen Group to systematically continue its model rollout with a view to tapping new markets and segments. In the area of drivetrain production, we will launch new generations of engines offering improved performance and lower fuel consumption and emission levels. In particular, we will continue to press ahead with the development of hybrid and electric motors.
In addition, Volkswagen will make cross-product investments of €14.5 billion over the next three years. This includes investments to expand capacity, such as a new vehicle production facility for Audi in Mexico, expanding Porsche’s Leipzig plant so that it can produce the new SUV model, the Macan, and increasing production capacity for automatic gearboxes. Other investment focuses include modifications to the press shops, paintshops and assembly facilities as a result of our high quality targets and the continuous improvement of our production processes. Non-production-related investments are mainly planned for the areas of development, quality assurance, sales, genuine parts supply and information technology.
Our objective is to finance our investments in the Automotive Division using internally generated funds. We expect cash flows from operating activities to amount to €61.4 billion over the 2013 to 2015 planning period. This means that the funds generated are expected to exceed the Automotive Division’s investment requirements by €11.3 billion, further improving our liquidity position. We expect net cash flow in the Automotive Division to develop positively in 2013 and 2014.
The plans are based on the Volkswagen Group’s current structures and already take into account Porsche’s automotive business, but not the possible settlement payable to other shareholders associated with the planned control and profit and loss transfer agreement with MAN SE. The joint ventures in China are not consolidated and are therefore also not included in the above figures. These companies will invest a total of €9.8 billion in new production facilities and products in the period from 2013 to 2015. These investments will be financed from the joint ventures’ own funds.
We are planning to invest €1.3 billion in the Financial Services Division between 2013 and 2015. We expect the rise in leasing and rental assets and in receivables from leasing, customer and dealer financing to lead to funds tied up in working capital of €45.3 billion. Roughly 34% of the total capital requirements of €46.5 billion will be financed from gross cash flow. As is common in the sector, the remaining funds needed will be met primarily through established money and capital market debt issuance programs and customer deposits from the direct banking business.