Volkswagen Bets $86 Billion On Its Future
One of the reasons why Volkswagen is hitting on all cylinders (don’t be U.S. myopic – always measure a car company by global success) is that they did not stop investing in the wake of the 2008 crash. They did not have to: Sales in the U.S. were low, and where you don’t have a lot, you can’t lose a lot. At the same time, VW had the big luck of being a major player in China. While U.S. and Japanese car companies stopped or severely dialed back their investments into R&D and capacities, Volkswagen kept on spending. This has a delayed effect of 3 to 5 years, and what we are seeing now is just the beginning of this effect. It is also the beginning of an even greater spending spree.
The Volkswagen Group will invest around €62.4 billion ($86 billion) in the coming five years. This investment plan has been approved in a Volkswagen Supervisory Board meeting yesterday.
Investments in property, plant and equipment will account for €49.8 billion ($68.7 billion). On top of this will come capitalized development costs of €11.6 billion ($16 billion). All in all, Volkswagen wants to invest around six percent of sales into the future. According to the press release, Volkswagen wants to safeguard that future “by building new production facilities, introducing new models and developing alternative drives, as well as with its modular toolkits.”
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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