November 21, 2014 - 6:57 am ET
FRANKFURT (Bloomberg) -- Volkswagen Group will keep pouring money into new vehicles, technology and factories as it chases Toyota Motor Corp. for the lead as world's largest automaker.
The automaker plans to invest $106 billion (85.6 billion euros) over the next five years, Europe's biggest manufacturer of cars, vans and trucks said today in a statement.
The plan calls for an increase in average annual spending on auto operations to about 17.1 billion euros a year, compared with 16.8 billion euros under its previous rolling five-year budget.
"We will continue to invest in the future to become the leading automotive group in both ecological and economic terms," CEO Martin Winterkorn said in the statement. "Development costs will remain high in the future as a result of high innovation pressure and increasing demands on the automotive industry."
Winterkorn has pushed VW to expand in recent years and expects to sell more than 10 million vehicles this year for the first time, four years earlier than initially planned. The German carmaker narrowed Toyota's global sales lead to 72,000 vehicles in the first nine months of 2014 from 227,000 a year earlier, as General Motors Co. fell further back into third place.
Since Winterkorn became CEO in 2007, the German manufacturer has added the Porsche, Scania, MAN and Ducati brands. VW also more than doubled its number of factories around the world to 107.
Biggest spender
VW will probably spend more than any other public company on r&d for the third consecutive year in 2014, ahead of Samsung Electronics Co. and Intel Corp., according to a study by consultancy Strategy& (formerly Booz & Co.). The company must now balance that spending with a new focus on improving its profitability, including a program announced in July to boost earnings at its namesake passenger-car brand by 5 billion euros by 2017.
VW will introduce more than 100 new or revamped vehicles this year and next, including fresh versions of the midsize VW Passat sedan, Audi's A4 lineup and Porsche's Macan compact SUV.
