Volkswagen Spends Itself Through The Crisis

by Bertel Schmitt

November 22nd, 2012 10:05 AM

volkswagen spends itself through the crisis

One of the reasons for Volkswagen’s current strength dates back four years. During the carmageddon of 2008 ff, multinational carmakers such as GM and Toyota drastically cut back investments into new cars and technologies. Volkswagen did not change R&D spending. Four years later, this translates into a host of new models, and revolutionary platform architectures (MQB, MLB, MSB) that promise even more new models at lower cost.

Faced with the European edition of carmageddon, Volkswagen won’t lower spending either. Instead, it will increase investments into new cars and factories, Reuters says.

Tomorrow, Volkswagen’s supervisory board is expected to sign off on new spending targets for the 2013-17 period.

Reuters expects Volkswagen to increase spending by 12 percent to as much as 70 billion euros ($89.73 billion) for its twelve brands over the next five years, after the spending target was raised 20.9 percent to 62.4 billion euros for the 2011-15 period.

This could be another nail in the coffins of Peugeot and Fiat, which have slowed or shelved whole vehicle programs, engine technologies and platform revamps.

#BertelSchmitt #Germany #R&D #Volkswagen

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13 of 18 comments

Oelmotor on Nov 22, 2012

Nice frames, but did VW invest in their motor engineering? The 1.4 TSI motors are suffering from premature timing chain failures...

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- Hans007 on Nov 22, 2012
  
  of course not. VW doesnt care about reliability. the EA888 in 2009 / 2010 A4s has a massive oil burning issue. they are rebuilding engine blocks with revised piston rings / cylinders. I know, i have a 2010 A4 that goes through a quart in about 1000 miles. it actually burned out the catalytic converter due to this. This is my first and LAST VW product.
  
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- Th009 on Nov 23, 2012
  
  @hans007 Yes ... the reliability is so bad that no one is buying their cars any more and the company is on the verge of bankruptcy. Right?
  
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- Volt 230 on Nov 23, 2012
  
  @hans007 This is a problem of many modern engines, my 98 Corolla is on its second engine, first one had the same oil burning issue which eventually killed it, second engine is having the same problem, what is a guy who drives a lot to do?
  
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- Toomanycrayons on Nov 23, 2012
  
  @hans007 "Yes … the reliability is so bad that no one is buying their cars any more and the company is on the verge of bankruptcy. Right?"-th009 Do sales actually represent endorsements? Maybe people have simply adjusted their acceptable level of product disgust upward, much as with elections, world news, violence, sports, relationships...
  
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Mike978 on Nov 22, 2012

Why did Toyota cut back on R&D spending? I thought they were long sighted (like the Germans) and not short sighted like GM.

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Dimwit on Nov 22, 2012

It's something that should be kept track of. It would not surprise me to find that the ones who are willing and capable of maintaining R&D are the ones that will survive. That may be a short list.

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- Mike978 on Nov 22, 2012
  
  Exactly - Toyota is a well run company and I would expect them to consider the VW group to be their chief rival. Yes there is H-K, Nissan etc but VW has similar economies of scale, a safe shareholding structure (20% owned by a German province) which minimizes worry about the stock price, solid market share in major regions of the world (the US is the main exception) and huge cashflow which allows them to spend freely. They undoubtedly make mis-steps but they have analysed the US market and have made some changes which will help - US centric product and a US factory,. Now they need to work on dealers and reliability - if they do that successfully then they will be a major player in the US.
  
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- Th009 on Nov 22, 2012
  
  Fiat and PSA are the ones most at risk, as Bertel says. Chrysler seems healthy but will that be enough to keep the parent company afloat?
  
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- Victor on Nov 22, 2012
  
  @th009 IMHO, PSA is doomed. The 301 is the right product, only 5 years late. Fiat as a group will do ok. Even if Fiat itself as a brand suffers, they still have Chrysler and its brands, and the premium brands.
  
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- Th009 on Nov 23, 2012
  
  @th009 Which premium brands? Only Ferrari has been successful. Maserati sells a few thousand cars a year, and Lancia/Alfa Romeo are selling fewer than 100K barely-premium small hatchbacks per year. Marchionne as much as said that the Fiat brand's future consisted of 500 derivatives and the Panda. And the 500 itself, introduced in 2007, is not due even a facelift until sometime after 2015. Effectively the company will be Chrysler, with some niche European brands and a decent Latin American business. That's my forecast.
  
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- Dimwit on Nov 23, 2012
  
  @th009 You start going down the list of companies and there are only a few. VW, Ford, Toyota, H-K, a little GM, a little Renault/Nissan, Mazda, Honda, BMW and MB. Chryco is very target investing and FIAT is shedding brands.
  
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Lowsodium on Nov 23, 2012

It will be awhile before they convince me the quality is there. My last Jetta was a good looking, nice car. Until the suspension squeaks drove me crazy. The terrible dealership was the worst part of my experience, but thats not all VW's fault.

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